If you’re trying to figure out what could happen with trade tariffs as quickly as five weeks from today, join the club: With so many different proposals foisted by Donald Trump in advance of his taking office next month it’s nearly impossible to sort it all out.
Underlying all of this is the debate on how much of this is negotiating posture and how much is real policy .
Candidate Trump once talked about a 100 percent tariff on everything – as in EVERYTHING – coming out of China. That was to be accompanied by 10 percent (sometimes it was 20 percent) on all other imports from everywhere else – as in EVERYWHERE – in the rest of the world.
Those numbers shifted more often than the degree of his spray-on tan as the campaign went on but whatever he was saying it seemed to resonate with voters and his hardline stance on America First is often cited as one of the key reasons for his victory in the November election.
President-elect Trump most recently changed his tariff talk…again. Canada and Mexico went to the head of his trade enemies list as he threatened duties of 25 percent on goods coming in from America’s second and third largest trading partners. No matter that the three countries have a pre-existing trade agreement – one he negotiated during his previous presidency – that would forbid (or at least complicate) any change in these tariff rates.
China in the meantime was now targeted for a 10 percent tariff on all exports to the U.S., substantially less than he had said before and lower than the selected tariffs he put into place on some product categories eight years ago. China, America’s largest trading partner, is also the one where there has been the most agreement on unfair practices. President Biden kept most of Trump’s previous tariffs and has added his own over the past few years but has not targeted other nations, particularly Canada and Mexico.
The Trump threats are tied to rhetoric about reducing illegal immigration and imports of nefarious drugs like fentanyl but to at least this viewpoint these are just political justifications and he would find other reasons for trade barriers if somehow these issues were solved.
Of course, both candidate Trump and president-elect Trump has continued to state that tariffs, old and new, are paid for by the exporting nations and not by importers who eventually are forced to pass them along – whole or in part – to consumers.
This is nonsense. A story on Quartz.com reports that “Collectively, Trump levied almost $80 billion worth of new taxes on Americans through tariffs on thousands of products valued at $380 billion in 2018 and 2019, according to the Tax Foundation. The trade war policies directly increased tax collections by an average of $200 to $300 per household, the nonprofit said in June.”
These new potential tariffs are likely to have similar results…and worse as the numbers and nations continue to increase. Even as executives at many of the American companies supported Trump during the election, they are now scrambling to figure out how to deal with the repercussions of all of this. Stockpiling goods in advance of the new tariffs is one solution but eventually the costs will be passed along to the people buying all of these products: Us.
So, will it be 10 percent? 25% percent? 60 percent? 100 percent? More? Nobody really knows. Nobody.
WarrensReport 