U.S. and Them
Hold onto your jeans through the Levi levy trade war
Last week the EU imposed tariffs on the US in retaliation for tariffs recently imposed by the US on long-standing allies around the globe, including Canada, Mexico, India, China and the EU.
The Trump administration imposed a 25% tariff on imports of steel, and a 10% tariff on aluminium. Morgan Stanley estimated that Trump’s tariffs on steel, aluminium, washing machines, and solar panels, as of March 2018, covered 4.1% of US imports.
These tariffs are particularly of concern to the UK whose largest exports are mechanical machinery at £48.5billion, cars £32.7billion, electrical machinery £27.7billion, and pharmaceuticals £26.3billion.
In return, the EU imposed taxes on €2.8billion (£2.45b) worth of products imported from the US, including bourbon, jeans, motorcycles, cranberries, cranberry juice, orange juice, sweetcorn and peanut butter. Commission chief Jean-Claude Juncker spelled out in March that the bloc would target “Harley-Davidson, bourbon and Levi’s jeans”.
The targeted products are produced by key demographics in president Trump’s support base, making evident that both the original tariffs and the EU response are politically, rather than economically, motivated.
Expect prices to rise on US products.
China said that it will retaliate for the US tariffs imposed on $50billion of Chinese goods that come into effect on July 6.
India is also planning to hit back to recoup trade penalties of $241million on $1.2billion worth of Indian steel and aluminium.
President Trump is now threatening a further 20% tariff on cars.
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