Pars Today – A new round of America’s trade war with its allies has begun, with the imposition of a 25% tariff on imports from Canada and Mexico and a 10% tariff on imports from China.
Donald Trump, the U.S. President, has threatened to impose tariffs on certain imports from the European Union and has warned that if BRICS countries replace the dollar with another currency, he will impose 100% tariffs on members of this trading bloc.
According to Pars Today, Trump’s return to the White House under the slogan “America First” marks the beginning of a new era in U.S. trade relations with its allies and trading partners. The prevailing sentiment in the U.S., led by Trump, is that open-door policies between nations and reduced trade tariffs have ultimately harmed the United States and to maintain its top economic position, the country must reverse the path it has followed for decades.
In a statement on the matter, Trump said, “Our country was wealthy when we imposed tariffs.” His reference is to the pre-World War II era when the U.S. imposed heavy tariffs on imported goods.
Currently, with the removal or significant reduction of trade tariffs, the United States has transitioned from being a major exporter to becoming a major importer, resulting in a foreign trade deficit of nearly $500 billion. In other words, Americans import $500 billion more than they export annually.
This situation, which has persisted for many years, is considered intolerable by U.S. officials and must change at all costs. The tool for this change is increasing tariffs on imports, with the hope that higher prices for imported goods will reduce their volume and decrease the U.S.’s massive trade deficit. They also hope to support American production and workers through these measures.
However, imposing heavy tariffs on imports from Canada, Mexico, China, or EU member states will provoke retaliatory measures, with those countries likely imposing similar tariffs on imports from the U.S. Consequently, U.S. exports will also suffer. In other words, the tariff war initiated by Trump will not only lead to higher prices for imported goods but will also harm U.S. export markets, pressuring American citizens from both sides. Trump himself has acknowledged that these measures will impose some pressure on the American people.
Nevertheless, none of these factors seem to deter Trump and his administration from entering and escalating a trade war. From their perspective, the U.S. economy is strong enough that it won’t be defeated in a trade war, especially against countries like Canada, Mexico, or EU members, and eventually, these nations will have to accept the conditions set by the U.S. Meanwhile, the U.S. is also trying to pressure Beijing politically and economically to force China into concessions.
However, the Achilles’ heel of the U.S. in its trade war with foreign nations lies within its own borders. The American people may not tolerate the rising costs caused by increased prices of imported goods and the loss of export markets, potentially pressuring their government to reconsider its approach. Particularly concerning is the possibility that domestic discontent stemming from the trade war could lead to Republican losses in next year’s midterm elections. Following that, Trump’s administration could come under pressure to de-escalate the trade war with U.S. allies.
MG/UR
