This week, tariff wars were heating – the stock market has decreased.
The United States imposed a 25 % tax on steel and aluminum imports on Wednesday, and an order was executed in February by President Donald Trump. The European Union and Canada, the largest steel supplier in America, responded quickly by raising their tariffs. China had already retaliated on Monday against other new US definitions, with the high American agricultural products fees.
It is classic war behavior. Definitions such as taxes work on imports, which makes buying products more expensive. Economics can end from all aspects of transactions to harm financially, but the risks may be higher for the nation that climbs import taxes more than others. The S&P 500 stock index in Wall Street decreased by 10.1 % of the peak on February 19, while the Dow Jones Global index fell from non -American stocks by 1.3 % at the time.
Why did we write this
When President Donald Trump raises definitions, do you have to resist other nations? This is what many do, with revenge moves designed to re -pressure Australia, USA, is one country that chooses a different path.
President Trump has many of the declared goals of his commodity from the high customs tariff: to strengthen American manufacturing, reduce trade deficit, and push other countries to make more effort to stop illegal immigration and fentian flow across the border. Its strategy is also seen as a generator generator for the federal government.
But aggressive tax increases indicate a sharp shift in America’s relations with other countries, which for 80 years aims to support free and open trade. Experts, experts and experts say that experts have the ability to transform international trade, which reduces global ties while creating incentives to produce more commodities in the United States
What are the goals of the revenge definitions?
Revenge tariffs are only: the definitions imposed by a country in response to the graphics imposed on its products. The goal in general is to force countries to negotiate.
This is not a new strategy, indicated by Francis Borwell, a distinguished colleague of the Atlantic Council. “This was a way to respond to commercial conversations and commercial conflicts,” she says. “The goal is always to move the other side to the bargaining table.”
Indeed, since he took office in January, there are signs that Mr. Trump’s position has not been placed in the stone. In early February, Mr. Trump announced 25 % tariff On all imports from Canada and Mexico. It was temporarily stopped after bumps from both countries, and then implemented on March 4 – with a postponement until April 2 for some goods, especially cars and auto parts. The United States also imposed a new tariff on China, by 10 % in all areas in early February, which has multiplied to 20 % per month.
In response to the American steel and aluminum tariff this week, The European Union will implement Anti -measures designed to be equal in value – a tariff for American exports totaling about 28 billion dollars. European Union President Ursula von der Layen said that this escalation is unfortunate, and “in a world fraught with the Paul’s political and economic balloon, our common interest is not the burden of our economies with definitions. We are ready to engage in a meaningful dialogue.”
The response to the European Union may also be a political motivation, according to Dr. Borwell: a display of unity between the European Union countries.
“Trump was critical of the European Union itself as an institution,” she says. In addition to hopes that the US revenge tariff will encourage the United States to re -wage negotiations, the European Commission seeks to recognize the European Union as an initial commercial body, instead of its member states.
The definitions of the United States were relatively low in modern history: on average, 2.5 % last year. Non -party Tax Corporation projects This will lead to more than three times this year to 8.4 %, which is the highest average since 1946 (10 %). The customs tariff in the United States reached its climax in the late nineteenth century, in front of the federal government She transformed the main revenue source For taxes on citizens instead of imports.
What are the benefits or risks?
The White House says the president is practicing definitions to confront. An extraordinary threat It is presented by illegal foreigners and drugs, “calling the Law of Economic Forces in International Emergency Cases. Definitions are a compromise segment in Mr. Trump’s war on unauthorized immigration. These economic sanctions aim to harm – which is enough to force America’s neighbors to take measures against the flow of immigrants to the United States.
In recent decades, many Americans have become concerned about the external flow of manufacturing to countries like China and Mexico, with low -wage workers. Imports taxes can be a way to remove consumers from choosing external products.
But to a large extent, economists say the customs tariff, including reprisals, lead to high prices, lower consumer options, and loss of jobs if the targeted sectors are severely exposed. Customs duties can also inhibit innovation through the temporary storage of industries from global competition.
Based on this logic, some countries resist the idea that revenge should be an automatic response. Australia said this week that it will not impose a tariff on the United States, and calls for the escalation of commercial tensions “a form of economic self -harm.”
Andrew Greenland, an economist at the National Office for Economic Research, says this damage is inevitable. If countries are carefully targeted, they can avoid self -harm.
“If you do not put a blanket tariff as the United States has done – you can put a strategic tariff on things that will not harm your economy,” he says.
For example, in 2018, European countries have a previous wave of Trump’s tariff by targeting American alcohol exports such as Bourbon. Dr. Greenland said that the strategy succeeded in favor of Europe because the American whiskey was indispensable – consumers can buy alternatives such as Irish whiskeys – and they tended to target the states of the Republic like Kentucky. This is a strategy that these countries may look to repeat.
“When Canada was the tariff of revenge – and the European Union is doing the same now – they look at the strongholds of the Republicans,” says Dr. Greenland. “They look at sensitive places politically, and where political pressure may be sufficient to persuade stakeholders in those states to reach the president and try to transform his perception.”
What is the modern history of revenge definitions?
Dr. Borwell refers to the tariffs of steel and aluminum definitions that Trump carried out during his first term. The European Union responded to the revenge definitions. When Joe Biden became president, his administration reached an agreement to allow the European Union to import a certain amount of steel and aluminum without fees. On the other hand, the European Union suspended their definitions.
“So one can say that revenge may have succeeded,” says Dr. Borwell of the Atlantic Ocean Council. “But you also have to take into account that the Biden administration has entered into positions designed to reform the relationship with Europe.”
The current trade war of America with China It dates back to 2017, When the American International Trade Committee found that the American clothes washing machine and solar industries had been injured by cheaper imports, and opened the door to “global protection” restrictions by President Trump at the time. During the next two yearsThe United States imposed customs duties on $ 350 billion in Chinese imports. China took revenge on Steel taxes On $ 100 billion in American products, which included a 178.6 % tariff for fine atom.
Countries agreed to stop the escalation of the calm in 2020, but the definitions remained in place through the Biden administration.
Trade relations may change in the long run if the cost of doing business is very large. On the global market today, countries can grow increasingly into new markets to avoid dealing with the United States, as Dr. Greenland notes.
“There is little bite when it comes to the United States that threatens definitions on Australia if they can circumvent and sell all things to China,” says Dr. Greenland.
