China isn’t the only country engaged in a trade war with the U.S.
In fact, President Trump expanded the economic battle to other countries this week, by slapping new tariffs on Argentina, Brazil, and France.
This week, Trump said he plans to impose new tariffs on industrial aluminum and steel from Argentina and Brazil. He said he’d also ramp up tariffs on a variety of popular French imports to the U.S.
By increasing tariffs on imported goods such as steel, the president hopes to make good on his 2016 promise to invigorate American companies, according to Fortune. However, steel companies are struggling, with U.S. Steel reporting a third-quarter loss of $35 million.
The trade war goes global
President Trump announced by tweet on December 2, 2019, that the United States would impose a 25% tariff on steel and a 10% tariff on aluminum from Argentina and Brazil as well as a 100% tariff on $2.4 billion worth of French foods and products.
President Trump alleged in the Twitter thread that both countries manipulate their currencies, hurting the American economy. Experts have disputed this allegation, claiming that Argentina and Brazil are actually trying to strengthen their currencies against the dollar. Instead, the president could be taxing Argentina and Brazil because they’ve sold billions of dollars worth of soybeans to China, which has halved its soybean purchases from the U.S. according to Bloomberg.
France has also been caught up in the trade war. In July, 2019, France passed a law placing a 3% tax called the Digital Services Tax on big American tech companies that operate in France such as Facebook, Amazon, and Google.
Responding to this tech tariff at the NATO summit this week, the Trump administration suggested that it would tax $2.4 billion worth of French goods at 100%, which could double the price of French favorites like wine, cheese, and cookware in the U.S.
The French Economy Minister Bruno Le Maire alleged that this 100% tariff would elicit a strong response from the entire European Union. The European Union on the whole recently became subject to American tariffs on $7.5 billion worth of European products.
South Korea too
In January, 2018, the Trump administration imposed a 50% tariff on washing machines from South Korea and a 30% tariff on solar panels from China. The move followed a push by domestic manufacturers of both products to get U.S. trade officials to impose taxes on imports, as a way to protect them from international competitors.
The trade war’s impact on the U.S. economy
The trade war is reportedly costing American consumers. With the current tariffs in place, American households will spend an extra $2,031 per year, according to the National Foundation for American Policy.
Additionally, though Trump’s steel tariffs initially boosted the industry in 2018 with the creation of jobs and an increase in steel prices, the manufacturing sector remained slow for the fourth consecutive quarter as of December 2019.
Farmers say they are struggling because of the trade war as well. Countries such as China are raising tariffs on American agricultural products in response to the United States’ increased tariffs on Chinese goods, which some agricultural experts say may cost American farmers. For example, China bought 5.9 million tons of soybeans from the United States during the first half of 2019, less than half of the 13.4 million tons that China purchased in the first half of 2018.
Background on the Trade War
- A trade war is when countries start waging an economic battle with each other using tariffs. One country will put tariffs on another’s goods, and the other will retaliate in kind.
- Over the last 30 years, the U.S. has signed numerous trade treaties to avoid trade wars, including the North American Free Trade Agreement (NAFTA).
- Agreements like this reduced the threat of trade wars, in part by eliminating many tariffs on exported and imported products.
- The Trump administration has been able to raise tariffs because of Section 301 of the Trade Act of 1974. Section 301 states that the United States can raise tariffs on countries that violate trade agreements or demonstrate unfair trade practices.
- Since 2018, the United States and China have notably been taking turns raising tariffs on each other’s exports. In May 2019, the United States doubled tariffs on $250 billion of Chinese products and China responded by announcing tariffs on $60 billion of American products. Steel, soybeans, whiskey, lumber, and other products have been caught in the crossfire of the trade war.