In an unexpected but aggressive action, former president Donald Trump signed a sweeping executive order that will impose up to 50% tariffs on goods coming from dozens of U.S. trading partners. The tariffs, which will go into effect on August 7, represent a dramatic return to protectionist policies reminiscent of his previous term. The decision follows a disappointing jobs report for July and is intended to incentivize domestic manufacturing and decrease trade imbalances.
Trump argued the move would “put American workers first” and that it would reduce the nation’s need to rely on foreign goods from other countries. This has already begun to spook financial markets and led to warnings from business groups, economists, and foreign nations.
Global Reactions: Allies Alarmed, Markets Shaken
A number of countries, including Canada, Mexico, Germany, and Japan, have expressed alarm over the announcement regarding steel and aluminum imports. Emergency trade talks are ongoing in Washington as Canada and Mexico hurried to negotiate exempted steel and aluminum supplies since retaliation has serious economic implications. The European Union previously indicated they would take counteractions if the United States decided against this latest gambit.
In the meantime, global capital markets reacted with volatility. The Dow Jones industrial average dropped more than 300 points following the announcement when tech and auto components were disproportionately hit the hardest. Some analysts are warning that this could trigger a new trade war similar to the extended standoff with China during 2018-2019.
Domestic Impact: Will This Help or Hurt?
Some American manufacturers were pleased that tariffs meant tariffs because they believed they were finally winning the unfair trade war against them. However, again many small businesses, or industries dependent on imports, are worried about tariffs raising costs and limiting production flexibility. Experts also caution shoppers will face increased prices on ordinary goods from groceries to electronics.
Critics say time may be risky, particularly because of growing concerns of an economic slowdown. Now that the job numbers show the unemployment rate has ticked up to 4.2% and job growth is starting to slow, economists think any increase in trade tensions could lead a more significant downturn in the U.S. economy. click here for source
