Last month, President Trump issued a tariff on imported steel and aluminum. The move was purported to help bring jobs back for the US steel and aluminum industries. Great! But experts warned that putting a tariff on imported steel and aluminum would hurt the US more than it would help. After all, when one country starts putting tariffs on imports, others might follow—and follow they did.
In addition to imposing a tariff on imported steel and aluminum, earlier this month President Trump announced his intention of slapping China with a twenty-five percent tariff on approximately 1,300 of its exports. Why? Last year, President Trump asked his trade representative to look into China’s unfair trade practices. The investigation concluded that China had been stealing US intellectual property (things like logos, brands, and creative design), with an estimated worth of $225 billion to $600 billion annually. President Trump’s response to China’s unfair trade practices was to put a tariff on goods imported into the United States.
How did China respond? With an equally hefty tariff on US exports such as airplanes, cars, and soybeans. Scratching your head as to what these two economic powerhouses are achieving with tariff threats? We are too.
Some economy experts are saying that these threats are merely negotiation tactics–you tax us, we’ll tax you too! Others think that these tariff threats are only hurting the global economy because consumers are the ones who lose. Is a trade war looming? Nothing’s certain yet, but China has since said it would allow foreign carmakers to enter its market without any caps or restrictions on how much ownership these foreign carmakers could have in the country. That’s huge because China is one of the largest markets in the world. Before this announcement, foreign carmakers were forced to work with Chinese car makers to get even a small piece of the Chinese car-buying pie.
Let’s hope that this is a good sign that the leaders of the world’s two largest economies will come to the table and work out a trade agreement that both can be happy with! Who wants a trade war, right? Not us consumers, that’s for sure!