New tariffs are set to hit the most symbolic products of the American way of life. Trump’s voters will assess the damage.
One thousand dollars. That’s the total bill Donald Trump plans to send to every American family for Christmas. In other words, the cost of the price increases, as calculated by JPMorgan Chase Bank this month just for kicks, that every family will have to bear over a one-year period as a result of the trade war being waged against Beijing. The cost hadn’t seemed so bad to Americans until now. Why? Tariffs first affected metals and machines, i.e., products mainly sought after by businesses. Unless the tariffs are scrapped at the last minute, on Sept. 1 they will begin to penalize the U.S. president’s supporters, some of whom switched over to the right after being promised better income prospects. Sweatshirts, watches, TVs – the new tariffs will hit the most symbolic products of the American way of life. Some Americans applauded the president’s wise choice to postpone a significant portion of the tariffs until Dec. 15, so as not to wreak havoc on holiday shopping. What’s with this country where people revel in having just one arm broken now and a second later on?
The damage inflicted on Americans, and more broadly on people worldwide, is already massive. On Aug. 29, the Organization for Economic Co-operation and Development released data showing cause for alarm: exports in the world’s top 20 richest countries contracted by almost 2% in the second quarter of 2019. However, in the trade war being played out between two global heavyweights, the most injured party isn’t who you’d think. Since January, U.S. exports to China have fallen by more than 20%. Exports from China to the U.S. resisted the impact of the tariffs, even increasing by one percentage point. The truth is that in contrast to previous decades, Beijing certainly needs Washington less than Washington needs Beijing. The Chinese have saturated the U.S. market with their goods and are looking to tap into markets elsewhere, including in India, Latin America and Africa. The same cannot be said about the U.S.; how can it have a standoff with China, a country that currently has the most promising consumer market?
It’s a typical scenario, seeing long-standing world powers brandish trade weapons to block the path of newer powers. Indeed, remember how Ronald Reagan curbed the rise of Japanese cars in the 1980s by implementing quotas? Protected from competition, U.S. carmakers sharply increased their prices. How much extra did each buyer pay? One thousand dollars.