Trump Beefing Up the Trade War With China……

There are arguments for and against increasing tariffs on goods imported from China to narrow the US trade deficit with emerging economic giant.

Trump has announced his plan to increase tariffs from the current 10% to 25% this coming Friday. The result of stalled trade talks.

Regardless of the effect on the trade deficit American consumers will pay more for goods imported from China. While US importers of Chinese goods pay the tariffs it is the American consumer that ultimately sees the increase in their cost of living. Businesses simply pass the increased costs on to consumers.

President Trump tweeted on Sunday that tariffs on $200 billion of Chinese goods will be raised from 10% to 25% on Friday, as trade talks between the U.S. and China progress “too slowly.

 

“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate.”

“No!”

The backdrop: In February, U.S. trade representative Robert Lighthizer told Congress that the U.S. had temporarily dropped its plans to raise the tariff rate to 25%, as the two sides inched closer to striking a deal.

  • Reality check: Trump has repeatedly claimed that tariffs have caused China to pay billions of dollars to the U.S. treasury. This is incorrect. The tariffs are paid by U.S. importers of affected Chinese goods, not by China’s government or by Chinese companies. Importers then either raise costs on consumers, lower their own profit margins or both.

Driving the news: Chinese Vice Premier Liu He — along with a 100+ person delegation — will be in Washington on Wednesday, per the Washington Post, for another round of trade talks. Sources have told CNBC that a trade deal could possibly come as soon as Friday, a day after the latest numbers on the U.S. trade deficit are released, though Trump’s latest tweets suggest otherwise.

Go deeper: Grading the impact of Trump’s China tariffs

SOURCE

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Les Carpenter

Certified Personal Trainer (CPT) and Corrective Exercise Specialist working with those over 50 years of age. Currently work at Prime Fitness located in The Enfield Senior Center, Enfield CT. Semi retired and enjoying life in the semi fast lane with my lovely bride and super grandchildren!

2 thoughts on “Trump Beefing Up the Trade War With China……”

  1. “Businesses simply pass the increased costs on to consumers”

    Of course, it is not quite that simple. A price increase will affect business, and rarely if ever does a price rise increase business. Each business has to decide how much to increase price ,and how much of a hit they can take in profits, and what are they going to do to cover the drop in profits and sales.

    Like

    1. Yes, you are correct. My 40 years in manufacturing management taught me businesses don’t lose money with their eyes open.

      They either offset cost increases by productivity improvements, beating up suppliers to lower prices, or raising prices. Sometimes a combination of all three.

      Ultimately the consumer foots the lion’s share of increasing tariffs.

      Like

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