Trump's trade war is getting serious — here's why it started, what it means for the US economy, and how it could hit you
- President Donald Trump has been on a nearly six-month long tariff spree, kicking off trade wars with several countries.
- Trump has placed tariffs on everything from steel to chicken incubators.
- Trading partners including China, Canada, the European Union, and Mexico have hit the US with retaliatory tariffs.
- Here’s a breakdown of how we got here and what the tariffs mean for the economy.
President Donald Trump declared on March 2 via Twitter: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.”
The tweet marked the announcement that the US would impose tariffs on steel and aluminum imports coming into the country — and the start of a growing trade war.
Since that point, Trump has opened up trade battles on a series of fronts, and the US and other countries around the world have slapped tariffs on $85 billion worth of goods.
Trump has long been a fan of tough action on trade. In the 1980s, the then-real estate mogul railed against the US’s trade deficit and warned of “other countries ripping off the United States.” In a 1990 Playboy interview, Trump was asked about his first action if he ever became president.
“Many things. A toughness of attitude would prevail,” Trump said. “I’d throw a tax on every Mercedes-Benz rolling into this country and on all Japanese products, and we’d have wonderful allies again.”
Given the president’s decades-long history of protectionist statements and direct signals on the campaign trail, the recent spate of trade restrictions should come as no surprise.
So far, Trump has used tariffs as the main weapon in his trade war. A tariff is a tax on a good coming into the US, also known as a duty. These duties are collected by Customs and Border Protection at the good’s port of entry. Once tariffs go into place, importers face the extra fee immediately.
Trump placed tariffs on a wide variety of goods and the moves are starting to make an impact on the US economy, prices, and more. Here’s a breakdown of how Trump’s trade fight is starting to take its toll.
The number of tariffs Trump has enacted or threatened is piling up.
Trump’s hard line on trade kicked off in February, when the administration officially placed tariffs on imports of washing machines and solar energy equipment.
But the protectionist push began in earnest at the start of March, when Trump announced a 25% tariff on imported steel and 10% tariff on imported aluminum. This move triggered widespread pushback from allies, since the tariffs were implemented on national security grounds.
Allies like Canada, the European Union, and Mexico argue that they pose no national security risk to the US and thus should not be slapped with tariffs. Those three countries, along with China and others, have filed a suit against the US with the World Trade Organization arguing the tariffs are illegal.
So far, the enacted tariffs haven’t hit a large percentage of goods with major trading partners, but that could change in a hurry.
China is the biggest target for Trump so far, with 11.7% of the total goods going between the two countries subject to tariffs.
Trump has also threatened to hit another $400 billion worth of Chinese goods with tariffs due to their retaliation. China accused the president of starting the “largest trade war in economic history.” While that claim may be a slight exaggeration now, it may come true in time.
The fight with Canada is the second-largest front in the trade battle, with 4.5% of total trade with the US subject to tariffs. Canadian Prime Minister Justin Trudeau has called the tariffs “insulting.”
Just 1.5% of the total trade between the US and EU is subject to tariffs, and 1.1% of trade between the US and Mexico.
For the EU, Canada, and Mexico, the amount of trade subject to tariffs would increase dramatically if Trump follows through on his threat to place tariffs on imports of cars and auto parts.
The goods subject to tariffs are wide-ranging — from bulldozers to chicken incubators to hairspray.
Trump’s tariffs have so far focused on industrial goods like metals, machinery, and components.
In particular, Trump has tried to attack industries that are part of China’s Made in China 2025 plan, which is designed to help boost Chinese companies in a variety of high-growth industries like technology.
By comparison, the retaliatory tariffs from China, the EU, and others predominately go after US agricultural goods, as well as a jumble of consumer products like nail polish and kitchen equipment.
Read the full article from it’s original source: http://uk.businessinsider.com/trump-trade-war-tariffs-effect-on-economy-prices-consumer-stocks-2018-7