The US is already in a full-blown trade war with several countries around the globe. At some point, you may have wondered how all this will affect you. Well, you won’t have to wait any longer because the trade war may just start edging closer to your wallet and your paycheck. Experts warn that if the White House makes good on its threat to impose tariffs on $200 billion worth of Chinese goods, Americans will have to deal with higher prices and diminished economic opportunities, especially if China decides to respond in the same way.
A new document published by the Office of the United States Trade Representative has outlined thousands of Chinese goods that will be targeted by the 10% tariff. Some of the products mentioned in the 205-page document include machinery parts, consumer electronics, critical farm inputs etc.
Some experts believe that the tariffs that have already been implemented by the Trump administration have already started to affect American businesses and workers. The president of the US Chamber of Commerce Thomas Donohue said in a statement that tariffs are taxes that will eventually raise the price of goods for everyone. He added that it’s very likely that tariffs imposed on any foreign goods will attract reciprocation from the affected nations and we will all fall into a trade war in the end.
Experts think that retailers who sell the affected goods will simply pass on the cost to the consumer. In the end, it’s the consumer that will end up paying more. In addition to this, prices may also increase for various goods sold by retailers, even for goods that aren’t in the tariffs list. Retailers will try to cushion the price increase by spreading the cost across all the goods they sell.
Many experts believe that no matter the scenario, consumers’ wallets will be affected. If businesses decide to cover the cost of tariffs themselves in order to maintain good prices, then they will become limited in terms of cash flow. As long as cash flow is low, businesses won’t hire new workers and may also be forced to cut down on operational expenses.
According to the White House, the tariffs imposed are designed to protect American jobs and industries. But President Trump may end up hurting the very industries he’s trying to protect if the trade protectionism escalates into a trade war.
This is not the first time that the US is imposing tariffs on imported goods. In 1930 during the height of the depression, The Smoot-Hawley Tariff Act that imposed tariffs on over 900 goods was passed. The legislation was designed to help the US recover from the depression. At first, there were significant improvements in the economy. But by 1933, three years later, the economy lost nearly $56 billion. A measure that appeared to be a solution at first ended up hurting the same people it was designed to protect. Regardless of this history, the White House has made it clear that it won’t back down from its proposal.