Economists warn that these tariffs could cause consumer prices to rise and may even lead to job losses.
Before we dive in to how all of this could affect you, let’s cover what exactly a tariff is.
What’s a tariff?
So, you might be asking: what exactly is a tariff? The simplest explanation of a tariff is: A tax imposed on goods bought from abroad—also called imports.
Countries typically impose tariffs on these foreign-made products to make them more expensive. This has the possibility of boosting local economies because people will be more likely to buy from local vendors who don’t have the tax imposed on them—making their products cheaper.
That leads me to the next point—why all these tariffs all of a sudden?
Why Trump has issued tariffs on Chinese exports
The White House released a statement answering that question.
China’s illicit trade practices—ignored for years by Washington—have destroyed thousands of American factories and millions of American jobs.
According to President Trump, these “illicit trade practices” refer to intellectual property theft that he’s claimed has caused damage to the U.S. economy.
Trump also wants to chip away at the $375.2 billion trade deficit. This deficit exists because the U.S. spends considerably more on imports from China than on exports sent to China.
On what products are tariff’s being placed?
The new tariffs that China may impose on the U.S., in retaliation t0 the tariffs imposed on steel, could range from everything from fruits and nuts to meat and steel. Here’s the whole list of all 128 tariffs China would like to impose.
The U.S., in turn, has already imposed tariffs on steel and aluminum, but now Trump is threatening China with another $200 billion in tariffs. These tariffs of 25 percent will be applied to goods that contain “industrial significant technologies.”
Who will be affected by both U.S. and Chinese tariffs
China’s tariffs could affect 40 different industries—which could mean a loss in jobs. Let’s take a closer look at who and what will be affected by these tariffs.
If the past is any indication of the future, some sectors of the job market could be hit hard. When former president, George W. Bush imposed tariffs on steel in 2002, roughly 200,000 manufacturers lost their jobs.
This time around, it’s farmers who are concerned about their businesses—specifically fruit and nut farmers. In the wake of potential Chinese tariffs, they’re worried that it will be difficult to find alternative markets for the goods they produce to make up for lost Chinese business.
According to the California’s Department of Food and Agriculture, in 2016-17 the U.S. exported more than two billion dollars’ worth of agricultural products to China. If China refuses U.S. imports due to high tariffs, that’s a significant loss.
If you’re in the market for a TV, dishwasher, or other appliances, you could be met with higher price tags if the U.S. goes through with their tariffs.
Nearly all of our TVs are manufactured in China, so if China has to pay 25 percent more for the parts, our prices will suddenly rise as well. Luckily, TVs aren’t an American staple (although, it may seem like the are).
What folks here in the U.S. might be more concerned about is the fact that the cost of iPhones could also rise, since they’re made in China, which will now be subject to tariffs on the components.
The auto industry
Not only will TVs and cell-phones become more expensive, but cars might see a rise in cost. China plans to put tariffs on most vehicles, including electric cars. Tesla, General Motors Co., and Ford Motor Co. are the companies that will be most affected.
The job market as a whole
Within those 40 industries that could be affected, there are about 2,103,026 people. This map from Marketplace, gives a clear indication of the areas that will be hit hardest – the West and Mid-Coast.
Those who will be most affected are the farmers mentioned above, as well as breweries and distilleries, aircraft manufacturers, pharmaceutical companies, and plastic manufacturers to name a few.
The economy is currently operating at what economists call “full employment” – meaning, everyone who is searching for a job can find one. It’s important to note that this loss in jobs is just a prediction as of now.
Tariffs in other countries
In the midst of all this talk about tariffs on China, there are a host of other countries also affected by tariffs imposed by the U.S. Each and every country has responded with their own tariffs, which could continue to drive up consumer costs for Americans.
Trump imposed tariff’s on Canadian lumber last November, driving up the cost of homebuilding here in the U.S. According to the National Association of Home Builders, these tariffs have driven up the cost of a single-family home by $9,000.
In response, Canada plans to hit the U.S. with tariffs on steel and aluminum products, plus 120 consumer goods. These goods include dishwashers, fridges, washing machines, pens, beer kegs, and even toilet paper. This means all those products—some of which are staples in U.S. households—could get more expensive.
The U.S. is also in negotiations with Canada and Mexico over a NAFTA (North American Free Trade Agreement) deal. NAFTA lifts tariffs on virtually all goods traded between the three countries. President Trump had threatened to pull out of NAFTA, which could lead to a trade war with Mexico and Canada. The deal will hopefully be resolved by July.
Mexico’s steel industry (as well as Canada’s and Europe’s) will soon be hit hard by a 25 percent tariff.
Mexico retaliated with their own tariffs on flat steel, lamps, pork legs and shoulders, sausages and prepared foods, apples, grapes, cranberries, various cheeses and other products.
President Trump imposed steel and aluminum tariffs on European Union, and in response the EU is imposing penalties on $3.2 billion worth of American products, including bourbon, orange juice, playing cards and Harley-Davidsons.
Due to these tariffs, Harley Davidson recently announced that it will shift some production overseas. President Trump responded to this move by Harley Davidson, saying, “they will be taxed like never before!” So the future move of Harley Davidson is still somewhat up in the air.
There aren’t many winners in the escalating trade conflict with China. New tariffs imposed on imported goods could mean that farmers and other employers lose business. Plus, car buyers and iPhone users could be met with higher price tags.
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