As the US and China engage in a trade war, President Trump’s tariffs are expected to significantly disrupt global trade, increase prices for consumers, and have far-reaching implications for the world economy.
Tariffs are taxes charged on goods bought from other countries. They typically take the form of a percentage of a product’s value, such as a 25% tariff on a $10 (£7.59) product, which would mean an additional $2.50 (£1.90) charge.
The ‘125% tariff on Chinese goods’ means that a $10 product would attract a $12.50 tax on top – driving the total cost up to $22.50. The companies that bring foreign goods into the country have to pay the tax to the government, which can be passed on to customers in some cases.
Understanding Trump’s Tariff Policy
For decades, President Donald Trump has argued that tariffs are necessary to boost the US economy. He claims they will encourage US consumers to buy more American-made goods, increase tax revenue, and lead to significant investment in the country.
Trump aims to reduce the gap between the value of goods the US buys from other countries and the value of those it sells to them. He argues that America has been taken advantage of by ‘cheaters’ and ‘pillaged’ by foreigners. However, a growing number of influential voices within his Republican Party have joined opposition Democrats and foreign leaders in attacking the measures.
How Trump’s Tariffs Will Affect the Global Economy
Trump’s tariffs are expected to significantly disrupt US car production and put up prices for consumers in the US and around the globe. Economists warn that the move could harm the world economy and push up prices for imported goods, such as clothing, coffee, and electronics.
The United States has a long history of car production, dating back to the early 20th century.
In 1908, Henry Ford introduced the Model T, which revolutionized the industry with its affordability and mass production techniques.
By the 1920s, US car manufacturers such as General Motors, Ford, and Chrysler dominated the global market.
Today, the Big Three continue to produce over 10 million vehicles annually, with a significant portion exported globally.
The US automotive sector employs over 900,000 people and contributes significantly to the country's GDP.
The cost of a car made using parts from Mexico and Canada alone could rise by $4,000-$10,000 (£3,035 – £7,588) depending on the vehicle. The measures could also damage the US economy, with some countries warning that they will be affected by Trump’s tariffs.
Mexico is a country located in North America, bordered by the United States to the north, Belize and Guatemala to the south, and the Pacific Ocean to the west.
With a rich history dating back over 2,000 years, Mexico has been home to numerous civilizations, including the 'Aztecs' and 'Mayans'.
Today, Mexico is known for its vibrant culture, stunning beaches, and delicious cuisine.
The country's capital city, Mexico City, is one of the largest metropolitan areas in the world, with a population of over 21 million people.
Located in North America, Canada is the second-largest country by area.
It shares borders with the United States to the south and three Canadian territories to the north.
With a diverse geography, Canada features vast mountains, forests, lakes, and coastlines along the Atlantic, Pacific, and Arctic Oceans.
The country has a population of over 38 million people, primarily English-speaking, but also home to French-speaking 'Quebec'.
Canada is known for its natural resources, including oil, gas, minerals, and timber.
How Will Trump’s Tariffs Affect You?
The impact of Trump’s tariffs on individual consumers is still unclear. However, it is expected that prices for imported goods will rise, and some firms may decide to import fewer foreign goods, making those available more expensive.
In the UK, the government has so far not announced any taxes on US imports, but it is drawing up a list of US products it could hit with retaliatory tariffs. Economists warn that US tariffs could knock the UK‘s economy off course and make it harder for the government to hit its borrowing rules.
Global Reaction to Trump’s Tariffs
The global reaction to Trump’s tariffs has been mixed. The ‘European Union, Canada, Australia, South Korea, Japan, and Italy‘ have all introduced retaliatory tariffs against the US. Other countries, such as China and Mexico, have also responded with their own tariffs.
In contrast, some countries, such as India, have not reacted to Trump’s tariffs at all. However, it remains to be seen how these measures will affect trade relations between the US and other countries in the long term.
Conclusion
Trump’s use of tariffs is a complex issue that has far-reaching implications for the global economy and individual consumers. While some argue that tariffs are necessary to protect American industries and jobs, others claim that they will harm the world economy and push up prices for imported goods. As the situation continues to unfold, it remains to be seen how Trump’s tariff policy will ultimately affect the US and the world economy.
