A momentary relief was received on Friday (7) with the harsh reality that the president Donald Trump had not yet finished his chaotic tariff regime.
In comments to reporters at the Oval Hall on Friday, Trump said he will announce new reciprocal tariffs next weekperhaps fulfilling a campaign promise and an old desire to match the import taxes of dollar foreign countries to restore what the president believes to be justice in international trade.
Friday’s announcement of new potential tariffs that could reach every corner of the world He shook investors after what had been a relatively quiet week for the actions.
Dow Jones Industrial Averag fell 400 points, or 0.9%. The wider S&P 500 also fell 0.9% and Nasdaq Composite Index, of heavy technology, fell 1.4%.
Although Trump’s 10% general rates on China came into force on Tuesday (4), and China retaliated the United States with its own expanded tariffs, the markets rose a little this week with the relief that Trump postponed 25% tariff plans on all products from Mexico and Canada.
Trump said reciprocal tariffs would guarantee “that we were treated equally with other countries” and could help reduce the budget deficit of the United States.
Tariffs have served as a fundamental part of Trump’s promise to increase revenue to pay for the extent of his 2017 tax cut, as well as other promised tax cuts.
But rates themselves may represent a huge tax increase for US consumers, which economists say they ultimately pay the costs of tariffs.
If Trump proceed with 25% rates on Mexico and Canada, which were postponed until March 1, the total direct cost of imports on Chinese, Mexicans and Canadians would equivalent to an increase in taxes of more than US $ 1,200 per year for the typical American family, they discovered researchers do Peterson Institute.
This would be equivalent to the largest increase in US taxes since at least 1993, the researchers added. Even if these 2017 tax cuts are extended, the Peterson Institute’s analysis found that the poorest 60% of wage earners would still “end significantly worse” due to tariffs.
Reciprocal tariffs could significantly add this account significantly.
It is unclear what would be the shape of reciprocal tariffs if they are decreed. Trump had recently threatened a 10% overall fare on all imports entering the United States.
But Trump’s threat of reciprocal tariffs seems to return to a frequent campaign chorus that equals dollar dollar foreign nations imports could help reduce US commercial deficits.
Commercial gaps measure the difference between the value of the goods that the United States imports and the value of the goods that the United States exports from and to a foreign nation.
Trump protested what he sees as unjust commercial agreements, incorrectly saying that the commercial gaps of the United States With foreign nations show that the United States are “losing” hundreds of billions of dollars to their neighboring nations.
Some economists warn that Trump’s language on US commercial gap has an unfair representation of what has become a crucial mechanism for the US economy – its ability to buy services offered by other countries, as well as things that are not much done Here, like coffee.
If Trump advances with reciprocal tariffs, this can lead to a series of retaliatory tariffs from impacted nations. This can trigger a trade war, leading to increasingly high taxes that ultimately harm consumers, which economists observe that they usually get stuck with the account at the end.
This is because American importers pay tariffs – not foreign tariffs. These importers pass the costs to retailers, who usually increase consumer prices in turn.
The 10% rate on China is a tax on about US $ 427 billion in goods. This already exceeds the various rates Trump imposed during his first administration about about $ 380 billion in foreign goods, according to estimates of Tax Foundation.
But Trump administration also delayed some of these rates on Friday, temporarily restoring the so-called minimis exemption: a breach that allows packages less than $ 800 to enter the country without tax.
The exemption came into force on Tuesday, and to fulfill the order.
The increasing confusion about how China’s items would be inspected to determine their import taxes.
Trump signed an executive action on Friday that restored minimi exemption until “proper systems are in force to completely and expedite tariff revenue” in the Department of Commerce.
The executive order did not say how long would the delay last. It was another example of uncertainty around the implementation and scope of potential tariffs that may or may not come soon.
