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Aviva Investors: Tariffed: who are the losers in Trumpís trade war?

Investment commentary for Financial Adviser and Paraplanners

2 Oct 2018

Aviva Investors: Tariffed: who are the losers in Trumpís trade war?

On September 17, Donald Trump took to Twitter to threaten higher tariffs on the US’s trade partners: “If countries will not make deals with us, they will be Tariffed!” True to his bombastic word, the US president announced further levies on Chinese imports shortly afterwards, marking an escalation in his trade war with the Asian superpower.

Since he took office, Trump has renegotiated trade deals and threatened to pull the US out of the World Trade Organisation. But the tariffs on China are the clearest evidence yet of his protectionist tendencies. Trump slapped a 10 per cent tax on an additional $200 billion of Chinese imports, threatening to increase the rate to 25 per cent next year if no deal is reached to ease the trade tensions.

Explaining the move, the president cited China’s insistence on ‘knowledge sharing’ with foreign firms in exchange for market access. But economists argue Trump’s methods will prove counterproductive. Unlike his previous levies on steel and aluminium, the latest tariffs target a wider range of products and could lead to higher prices for the American consumer. Neither will tariffs banish Trump’s true bugbear: the US trade deficit.

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