- President Donald Trump imposed 25% tariffs on $16B worth of Chinese products on Aug. 23.
- These tariffs will affect 279 items, including motorcycles, thermometers, and transportation vehicles.
- China responded in turn, also hitting U.S. imports with 25% tariffs on $16B worth of products, affecting items such as crude oil, cars and medical equipment.
Just like a vehicle is subject to a toll before entering a given highway, a tariff, in simplest terms, is a tax on a product coming into a country.
At their best, tariffs are used to raise domestic revenue or to protect industries or jobs. At their worst, tariffs can stifle domestic industries and make consumers reach further into their pockets when paying for the same goods. Everything from pens to cars can be affected.
For businesses slapped with tariffs, there are a few choices to make up the losses: slash costs, maintain costs while the bottom line takes a hit, or pass the higher costs on to customers. China, the largest exporter in the world, has responded to the latest round of tariffs imposed by the U.S. government in turn: 25 percent tariffs on $16 billion worth of goods after the U.S. imposed the same on Chinese products. Stock effects have been mixed, but U.S., Chinese, and European markets stayed relatively flat after the latest tariff escalation, according to Investor’s Business Daily.
As President Donald Trump continues trade negotiations, the administration now faces retaliatory tariffs in a trade war it kicked off. U.S. industries, investors and consumers are starting to feel the effects — or at least brace for them. Here’s a breakdown of the types of tariffs and what’s at stake for the U.S. and your wallet.
Steel and Aluminum Tariffs
- Countries affected in addition to the U.S.: Canada, Mexico and the European Union
- Cost impact: A 25 percent tariff on all imported steel and 10 percent on all imported aluminum
The Rust Belt was partly responsible for electing Trump in 2016. Voters living in areas from western New York throughout the Midwest were galvanized by his campaign promises to revive the economically fragile region, but almost two years later, Trump effectively killed the World Trade Organization, according to the Council on Foreign Relations, by imposing steel and aluminum tariffs, which greatly contributed to the economic strife of the struggling region.
Everything from home appliances and food to airplanes, cars and construction materials depend on these important metals. Since the tariffs were introduced earlier this year, U.S. allies and trade partners have responded with tariffs on consumer products like food, cigarettes, denim and motorcycles.
On Aug. 10, Trump said he would double the tariffs on steel and aluminum imports from Turkey, where there is currently an economic crisis. The Trump administration is applying pressure to Turkey for imposing duties on $1.8 billion in U.S. goods in June, for the detention of American pastor Andrew Brunson, and because it objects to Turkey’s plan to acquire a Russian missile defense system, CNBC reported. U.S. lawmakers fear that the transaction could expose weaknesses in the American-made aircraft, and that Turkey could share those vulnerabilities with Russia.
What Trump tweeted about steel and aluminum tariffs:
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
— Donald J. Trump (@realDonaldTrump) August 10, 2018
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!
— Donald J. Trump (@realDonaldTrump) March 1, 2018
Consumer Goods Tariffs
The price of Sharpies might go up and investing in the maker of Sharpies just got cheaper all because of forecasting tariffs and retaliatory tariffs, according to Crain’s New York. Newell Brands forecasted that just a 10 percent tariff on China-sourced goods — let alone a proposed 25 percent tariff being considered by the Trump administration — could cost the company $100 million. The forecast caused Newell Brands stock to drop 14 percent, decreasing its market value by $1.8 billion.
Newell Brands manufactures the following products, which could see a price increase or an increase in manufacturing and distribution costs because of tariffs:
- Sharpie pens
- Yankee Candles
- Rubbermaid products
- Goody products
As a countermeasure to U.S. tariffs on Canadian products, the Department of Finance Canada released a long list of consumer goods originating in the U.S. that are subject to a 10 percent surtax, which started July 1, 2018, including but not limited to:
- Strawberry jam
- Orange juice
- Ketchup, mayonnaise and other sauces
- Toilet paper
What Trump tweeted about tariffs:
..Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!
— Donald J. Trump (@realDonaldTrump) August 5, 2018
- Countries affected in addition to the U.S.: Canada, China, Finland, Germany, Hungary, Italy, Japan, Mexico, Slovakia, South Africa, South Korea, Spain, Sweden, Turkey, United Kingdom
- Cost impact: 25 percent tariff on roughly $200 billion in foreign-made cars in 2018, as reported by The Washington Post; 25 percent tariffs on $16 billion worth of Chinese products that cover both fuel and vehicles.
Trump has proposed charging tariffs of 25 percent on imported cars, SUVs, vans, trucks and auto parts, which could send tariffs soaring to $445 billion, up from $85 billion.
For American drivers, this means that the same imported vehicles are going to cost a lot more. The price of a Honda Civic, or a similar entry-level car, could increase between $1,408 and $2,057; the price of a new compact SUV or crossover vehicle could jump by $2,093 to $3,066; and sticker shock could be felt by drivers shopping for upscale compact SUVs and crossovers as $4,708 to $6,972 could be added to the cost, according to the Peterson Institute for International Economics.
What Trump tweeted about tariffs:
Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that – and everybody’s talking! Remember, we are the “piggy bank” that’s being robbed. All will be Great!
— Donald J. Trump (@realDonaldTrump) July 24, 2018
- Countries affected in addition to the U.S.: Canada, China, Mexico and the European Union
- Cost impact: A $14 billion emergency aid package to U.S. farmers
Farmers in the breadbasket of America have been so deeply affected by the tariffs that they’re expected to receive a $12 billion emergency aid package from the U.S. Department of Agriculture. In a release from the USDA, the bailout was described as a short-term strategy to give the Trump administration time to work on a longer-term solution.
American farmers feed the country but also depend on being able to sell overseas. Imposed tariffs, however, have driven up the cost of crops, including soybeans and sorghum, livestock products like milk and pork, and many fruits, nuts, and other specialty crops. Other countries have already taken note of this.
China, for example, has mostly halted the import of U.S.-grown soybeans and is now concentrating on growing its own soybeans, though it could be years before domestic product volume matches American imports.
What Trump tweeted about tariffs and farmers:
Farmers have been on a downward trend for 15 years. The price of soybeans has fallen 50% since 5 years before the Election. A big reason is bad (terrible) Trade Deals with other countries. They put on massive Tariffs and Barriers. Canada charges 275% on Dairy. Farmers will WIN!
— Donald J. Trump (@realDonaldTrump) July 20, 2018
- Country affected in addition to the U.S.: China
- Cost impact: 25 percent tariffs on $50 billion worth of Chinese goods
From the smartphone in your pocket to the computer on your desk, most of the technology products keeping the world running are imported from China, but China also imports around $130 billion worth of American-made goods each year. Although materials like steel and aluminum are used to manufacture phones, cameras and computers, technology products can be subject to their own separate technology tariff.
In May 2018, the White House announced tariffs on Chinese high-tech goods “containing industrially significant technology.” This decision was a response to “China’s unfair trade practices related to the forced transfer of American technology and intellectual property,” the Office of the United States Trade Representative said in a statement. The full impact of this tariff on various products is yet to be seen, and companies like Apple are paying close attention. According to Nasdaq, this could be disastrous for Apple unless the company gets some sort of exemption because China accounts for nearly 20 percent of its revenues.
What Trump tweeted about tariffs and trade wars:
Every time I see a weak politician asking to stop Trade talks or the use of Tariffs to counter unfair Tariffs, I wonder, what can they be thinking? Are we just going to continue and let our farmers and country get ripped off? Lost $817 Billion on Trade last year. No weakness!
— Donald J. Trump (@realDonaldTrump) July 25, 2018
Trump Trade Talks With European Commission Result in Tariff Hold
On July 25, 2018, President Trump and European Commission President Jean-Claude Juncker met to work on eliminating tariffs and other barriers on trade, according to CNN. They agreed to hold off on non-auto tariffs that threatened to devolve into a trade war for now.
Keep Reading: Money Lessons You Can Learn From President Donald Trump
Trump tariff tweet:
The United States and the European Union have a $1 TRILLION bilateral trade relationship – the largest economic relationship in the world. We want to further strengthen this trade relationship to the benefit of all American and European citizens… pic.twitter.com/4zlmEEtCpG
— Donald J. Trump (@realDonaldTrump) July 25, 2018
Click through to read more about how your taxes will change under Trump’s plan.
More on the Economy
- 10 Effects of Inflation — and How to Protect Your Money Now
- Cities Where You Can Realistically Live on Minimum Wage
- Ways 9/11 Impacted the US Economy
Stephanie Barbaran contributed to the reporting for this article.