“Trump” and “trade war” with the world; Goals and consequences
why Trump’s tariff policy
Tariffs are border taxes that are received for imports from foreign countries and importers pay the tax when entering the customs of the destination country. “In my opinion, the most beautiful word is in the dictionary of the tariff dictionary and this is my favorite word,” Trump said in a speech in year 4. I look at some of these agreements and say who will never sign it? ” The point is that America is the largest importer of goods in the world. The cost of imports reached about $ 5 trillion in year 2.
The US also has the largest deficit of $ 2 trillion worth of commodity trade. It is the largest US business deficit with China and the European Union. According to statistics, US trade deficit with China was worth $ 5 billion and with the European Union worth $ 5 billion. Under these circumstances, Trump’s main word about new tariffs, which includes more than 5 countries, is that the United States has been abused by business partners and has become cheap imports into a non -industrial country.
As US Treasury Secretary Scott Banstify, Trump pursues three general goals of the new US tariff policy on imported goods from other parts of the world.
1. Correction of business practices
Trump claims that non-tariffs for some countries are unjustified while imposing tariffs on American goods, and forms some kind of imbalance in US economic relations with other countries. Therefore, it seeks to fix this imbalance with mutual tariffs. In his view, increasing tariffs for two reasons can help boost US domestic production:
first; Increasing the cost of importing goods from abroad can encourage companies to transfer production into the US.
Second; Return of production jobs. Increasing tariffs will increase foreign goods importers to increase commodity prices, which pushes US consumers to use domestically manufactured goods. “I hope the prices of cars will rise because if it is done, people will buy US -made cars,” Trump said in an interview. The transfer of total supply chains to the United States is very expensive and leads to rising consumer prices, resulting in non -competitive, non -competitive products manufactured in the United States.
۱. Increase in revenue
Trump, who has been pursuing the federal government budget until recently and even adjusted federal employees, is now planning to increase government revenue by increasing tariffs. Since tariffs are essentially taxing imported goods, US importers will pay more tax to the US government according to the proposed policy.
US revenue from tariffs in the year was about $ 2 billion, equivalent to 1.5 percent of the total federal income. Trump promised to cut taxes and renew the tax and jobs of the Year 2 in the campaign. According to the tax agency’s data, global tariffs at a rate of 5 % can generate $ 1.5 trillion in revenue by 2 %.
1. Tariffs; Foreign policy leverage
The Treasury Minister pointed out at a Senate confirmation meeting that tariffs are a stronger tool than sanctions to force other countries to do what the US wants. It seems that Trump intends to force various countries from Mexico to Canada and China to fulfill his promises to stop illegal immigration to the country.
Trump tariff policy consequences
1. Slowing down economic growth
One of the consequences of increasing tariffs is the decline in US economic growth. Carl Weinberg, a senior economist and director general of Economics Frequency Companies, believes that tariffs may reduce US GDP in the second trimester by 5 %.
۱. US entry into recession
Specialists consider one of the most important consequences of increased tariffs as US entry into the recession period. With the announcement of new tariffs, US companies have fallen by more than $ 2 trillion, the biggest drop since the Corona . Banks, retailers, clothing, airlines and technology companies find the most damage. The Fitch Ratings reports that tariff increases have been a new game change that will not only put the US economy, but also the economy of many countries. ”
1. Consumer costs
rising prices of goods and services will increase the cost of US consumers. The US Bank of JP Morgan estimates that 5 percent tariffs raise the price of new cars to $ 4,000. “How much car prices and other imported goods can rise can rise, it is still unclear, especially since businesses know that their customers are financially difficult,” said LPL Financial economist Jeffrey Ruch.
۱. Possibility of a business war
tariffs can increase the likelihood of trade war between countries. Following the announcement of new tariffs against China, the country also responded to Washington by taxing 5 % on some of the US imported goods. Canada also announced that it is imposing a 5 % tariff on US cars. In the case of reciprocal tariffs, the likelihood of a trade war increases more than ever. Some consider this situation to be similar to the tariff law in year 2.
This year, during the presidency of Herbert Hoover, the government decided to protect US farmers from competition by Europe, signed a bill issued by Senator Smote and Senator Havuli to increase tariffs on agricultural imports. The law was accompanied by retaliation, and countries increased tariffs for US products imports. The trade war caused by this law reduced US import and export value by 5 % in the years 1-5. Sam Stowwal of the CFRA Investment Research Institute believes that “Trump knows that if we want to flame the World War, such as the Smote Hawali tariff will be repeated again.”
result
Trump’s new tariffs are based on the approach of the new US President that the United States has been abused by business partners and has become a non-industrial country. Accordingly, in his view, new tariffs can encourage companies to transfer production to the United States, increase government revenue, and provide the use of tariffs as foreign policy leverage. At the same time, this tariff policy can reduce US economic growth at least in the short term, bring the US economy a period of recession, increase domestic consumer costs, and ultimately provide conditions for a full -fledged trade war.
Sajjad Moradi Clard; International Relations Researcher
