The United States has been at the center of a trade war in recent months, with President Trump implementing tariffs on goods from various countries. One of the key aspects of this trade war has been the concept of “reciprocal” tariffs, where the US imposes tariffs on countries that have previously imposed tariffs on American goods. This has resulted in a back-and-forth of tariffs between the US and some of its biggest trading partners, causing uncertainty and concern for businesses and consumers alike.
But what exactly does this mean for US trade with the countries hit hardest by these so-called “reciprocal” tariffs? Here’s what you need to know.
China
The US and China have been engaged in a trade war for over a year now, with both countries imposing tariffs on billions of dollars worth of goods. The US has accused China of unfair trade practices, such as intellectual property theft and forced technology transfers, while China has argued that the US is trying to contain its rise as a global economic power.
The impact of these tariffs on US trade with China has been significant. In 2018, the US imported over $540 billion worth of goods from China, making it the country’s largest trading partner. However, the tariffs have led to a decrease in imports from China, with US companies looking for alternative suppliers. This has also resulted in higher prices for American consumers, as companies pass on the cost of tariffs to their customers.
European Union
The US and the European Union (EU) have also been caught up in the trade war, with the US imposing tariffs on steel and aluminum imports from the EU. The EU responded with retaliatory tariffs on US goods, including motorcycles, bourbon, and peanut butter. This has led to a decrease in US exports to the EU, with American businesses losing out on potential sales.
The EU is the second largest trading partner of the US, with over $717 billion worth of goods traded between the two in 2018. The tariffs have also caused tension between the two allies, with the EU threatening to impose further tariffs if the US goes ahead with its plans to impose tariffs on European cars.
Canada and Mexico
The US has also imposed tariffs on steel and aluminum imports from Canada and Mexico, citing national security concerns. In response, both countries have imposed retaliatory tariffs on US goods, including steel, aluminum, and agricultural products. This has resulted in a decrease in US exports to these countries, with American businesses losing out on potential sales.
Canada and Mexico are the US’s largest trading partners, with over $1.3 trillion worth of goods traded between the three countries in 2018. The tariffs have also complicated the renegotiation of the North American Free Trade Agreement (NAFTA), with both Canada and Mexico pushing back against the US’s demands.
Impact on US Businesses and Consumers
The implementation of these tariffs has caused uncertainty and concern for US businesses and consumers. Many businesses are facing higher costs for imported goods, which could lead to job losses and higher prices for consumers. The tariffs have also resulted in retaliatory tariffs from other countries, making it harder for American businesses to compete in the global market.
Moreover, the constant threat of further tariffs and trade tensions has led to a decrease in business investments, as companies are hesitant to make long-term plans in such an uncertain environment. This could have long-term effects on the US economy and its competitiveness in the global market.
What’s Next?
The US and China have recently reached a temporary truce in their trade war, with both countries agreeing to hold off on further tariffs while they negotiate a trade deal. This has brought some relief to businesses and consumers, but the uncertainty still remains.
The US has also been in talks with the EU, Canada, and Mexico to resolve the trade issues and come to a mutually beneficial agreement. However, the outcome of these negotiations is still uncertain, and the possibility of further tariffs and trade tensions cannot be ruled out.
In conclusion, the US’s “reciprocal” tariffs have had a significant impact on its trade with the countries hit hardest by these measures. While the intention may have been to protect American businesses and workers, the reality is that these tariffs have caused harm to the US economy and its relationships with its key trading partners. Let’s hope that a resolution can be reached soon, and that the US can continue to thrive in the global market.
