NORTH CAROLINA, USA (Nettavisen): “I am a tariff man”, Trump stated in 2018.
That was the year then-President Trump started a trade war with China. Among other things, Trump introduced tariffs on solar panels and washing machines, and steel and aluminium.
In September 2018, he slammed a 10 percent tariff on $200 billion worth of Chinese imports. He later increased it to 25 percent in 2019.
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Will introduce customs duties
The annual inflation rate in the United States was 1.9 in 2018 and 2.3 in 2019. Now in a tougher economy, where central banks around the world have raised interest rates sharply, economists are concerned about how Trump’s economic proposals may affect the level of inflation.
This year alone, Trump has stated that he will impose a 60 percent tariff on goods from China, and a 100 percent tariff on Chinese cars manufactured in Mexico.
He will also introduce a 10 percent customs duty on all goods.
The rate could also be higher, he recently told Time.
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Track recession
Economists in CNN believe that the announced tariffs give cause for concern:
– Tariffs make consumers poorer. The economy is shrinking. This would be the most damaging part of a Trump 2.0 economic agenda,” says economist Alex Durante of the Tax Foundation.
– If Trump increases the tariffs as he proposes, then the economy will probably enter a recession afterwards, says Mark Zandi in Moody’s.
Head Ngozi Okonjo-Iweala of the World Trade Organization (WTO) stated on Wednesday that a 10 percent customs duty on all imported products leads to a lose-lose situation that could end the current stability of the trading system.
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– Will escalate the trade war
Professor Andreas Moxnes at the University of Oslo researches international trade. He points out that Europe and Norway will also be affected by such a move from the major US economy.
– It will be harmful for European and Norwegian business. It will make it difficult for our companies to compete against American companies, says Moxnes to Nettavisen.
He points out that other countries will also probably respond with the same coin.
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– It will probably escalate the trade war we already have. It could have major consequences for the world economy in the long term, he adds.
– How?
– International trade is driven by us following the rules of the game of the World Trade Organisation. A trade war would undermine our multilateral trading system. Especially small, open economies like Norway will lose out by not having a common set of rules, he concludes.
Trump angered farmers when he imposed tariffs on agricultural goods from China in 2018. China responded with its own tariff walls. Many American farmers lost large amounts of income due to the trade war, and the Trump administration tripled public support for agriculture to save parts of the industry.
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– This is the worst case to begin with
– Prices will go up
Moxnes does not buy the argument about a possible recession, but says that American consumers will notice it in their wallets.
– What the research shows about the trade war with China is that when tariffs are set to 20 per cent, prices go up by 20 per cent, he tells Nettavisen.
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In the current situation, with inflation and expensive times, the customs duties can contribute to higher inflation.
– Introducing new customs duties in a situation with relatively high inflation is not ideal. It will take longer before interest rates are lowered, says Moxnes.
The presidential candidate does not believe that prices will be increased with the customs measures by businesses passing the cost on to customers. To Time, Trump says that the tariffs will punish the exporting country, which will earn less, while the United States will earn more.
