US President Donald Trump yesterday announced a whole range of new import taxes (tariffs) on goods imported to the USA. This BBC page gives you a list of major countries affected: https://www.bbc.co.uk/news/articles/c1jxrnl9xe2o
The president said the US had for more than five decades been “looted, pillaged, raped and plundered by nations near and far, both friend and foe alike”.
The UK will face a base tariff of 10% but it will be 25% on motor cars. But we are getting off lightly in comparison with many other countries such as China (54%) and the whole of the EU (20%). Aren’t you glad we left the EU?
These tariff rates are designed to not just be reciprocal rates to those imposed on US imports but also designed to compensate for non-tariff trade barriers such as regulations that discriminate against US products.
The negative impact on the UK stock market has been quite prompt as many UK companies export manufactured products to the USA. But you can also view these changes as giving a competitive advantage to UK manufacturers as tariffs imposed on their products will be less than from many other countries!
In reality many UK manufacturers have facilities in the USA – for example Rolls-Royce aero engines. This will offset some of the damage from tariffs.
What’s my view? Barriers to trade are never welcome as they depress economic activity. But the USA is not being unfair in trying to rebalance world trade more in their favour.
What’s your view?
Roger Lawson (Twitter: https://x.com/RogerWLawson )
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Perhaps Trump et al forget the huge benefit which US consumers have reaped over the last 50 years with the explosion of low labour cost Chinese manufacturing and the establishment of the petrodollar system which has given the US a permanently overvalued currency. It’s hardly surprising that US manufacturing collapsed. Tariffs are an additional factor. In 1947 average tariffs were 22% but fell to 3% in 1999.
Trumps actions look like changing the whole post war world order. Probably with unexpected consequences; he can’t control the bond market.