Are They Tariff-ing Each Other Apart?

May 19, 2019

Let’s trade! That’s something that you might hear at school. Whether it’s trading a snack at lunch or Pokémon cards during recess, the act of trading is that you give something to someone and that person gives you something in return. Makes a lot of sense, right? Trading happens with countries too. Countries trade because one has something the other needs and vice versa. However, when countries trade, the goods that are traded are taxed. In other words, a country that receives goods from another country must pay a tax before receiving those goods. Countries negotiate terms of trades and sign agreements. But what happens when the two largest world economies can’t agree on a trade agreement?

The United States and China are the two largest economies in the world, meaning they make and trade the most goods in the world, and they trade a lot of goods with each other. Unfortunately, these two countries aren’t too happy with each other right now and can’t agree on a trade agreement. As a result, they’re flinging tariff hikes on each other’s imported goods like a food fight in a cafeteria! Earlier this month, President Trump increased tariffs on a whopping $200 billion worth of Chinese imports after a trade agreement couldn’t be reached with China’s President Xi. In return, President Xi raised the tariffs on $60 billion worth of US imports. So who gets hurt in the crossfire? People like us who buy imported goods like toys and clothing, and farmers who sell or export agriculture to China will pay for these increases. Let’s hope this tariff war ends soon!