Expert Analysis: The True Impact of Trump’s Tariff U-Turn on American Trade
North America correspondent Anthony Zurcher gives a critical analysis on how the recent suspension of higher tariffs might affect longstanding trade relationships and the global economy.
1) Negotiating Better Trade Deals
“For decades, our country has been looted, pillaged, and plundered by nations near and far…” – Donald Trump
Trump's initial plan proposed a 10% baseline tariff and additional “reciprocal” tariffs on 60 countries. Allies scrambled, worried about debilitating economic impacts. More than 75 world leaders have reached out to Trump offering negotiations and trade concessions. America’s partners have 90 days to secure agreements, which indicates a possibility of achievement for Trump’s ambitions.
2) Revitalizing American Industry
“Jobs and factories will come roaring back into our country…We will supercharge our domestic industrial base.” – Donald Trump
Trump has argued for tariffs as a tool for company rehabilitation. However, the whimsical application and withdrawal of tariffs create uncertainty, hindering business decisions to invest in US factories and facilities.
3) The Trade War with China
“They were taking tremendous advantage of us.” – Donald Trump
Trump’s about-face on tariffs has been flagged as a strategic confrontation with China. But, this comes with the inherent risks (Potential for economic and political backlash) of engaging the second-largest economy globally and may alienate key allies.
4) Raising Tax Revenue
“Now it’s our turn to prosper… use trillions of dollars to reduce our taxes and pay down our national debt…” – Donald Trump
A 10% universal tariff could potentially bring in $2 trillion over a decade. But it could pose a risk when residents switch to more domestic products, decreasing tariff income over time.
5) Lowering Prices for Consumers
“More production at home will mean stronger competition and lower prices for consumers.” – Donald Trump
The general effect of tariffs could be higher prices for consumers, with low-income American households expected to be most affected. This is the opposite of what Trump promised and could harm Trump’s political standing and future for the Republican party.
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Source: https://www.bbc.com/news/articles/c209x48ndjpo
