Donald Trump has taken an important step towards a radical and much overdue change in U.S. trade policy. He will place a 10% tax on imports from almost every country. Yet this decision comes amidst a continued hardening of US policy towards China. That nation is currently facing a staggering 20% tariff due to its participation in the fentanyl supply chain. The total levies on Chinese goods have just reached 30%, alarming American consumers and American businesses.
Yet it’s the ensuing announcement of new, proposed tariffs that has everyone’s attention. Trump has occasionally threatened to slap new tariffs on tech behemoth Apple and the European Union. Here’s his boldest move — a 50% tariff on goods imported from the EU. This tariff goes into effect June 1. But then these recent developments rattled the market, sending it sharply down. When it skipped tariff exclusion extensions, it stomped on much of the progress we made post-Trump’s rollback of some tariffs.
In a marked departure from previous trade policy relations, the U.S. has suspended sweeping “Section 301 reciprocal tariffs” slated against dozens of countries. Trump has exempted some essential technology products such as phones, computers and chips from strict reciprocal tariffs. These tariffs on Chinese products previously increased rates as high as 125%. By no means does this exemption reduce the overall impact and burden of tariffs on American consumers. Instead, right now they are looking at their most recent highest average effective tariff rate since 1934.
Specifically, he’s cut tariffs on automobiles and eliminated duties on some imports from Mexico and Canada. The big trade picture is still convoluted. Indeed, the recent U.S.-China agreement reflects a departure from Trump’s earlier hardline approach. Consequently, most tariffs are still in place. Yet the troublesome, overall 10% tariff on imports from most of the world still aggravates pricing forms across every sector.
Market analysts have already warned of the repercussions these new tariffs will have on consumer spending and economic growth. The recent stock market plunge demonstrates the unpredictability of international trade policy and impacts on the U.S. market. As stakeholders analyze the potential outcomes of these tariffs, businesses are bracing for changes in import costs that could affect pricing strategies.
