The U.S. has a $3.9 trillion merchandise trade currently navigating challenging waters due to the 2018 trade tariffs, part of the Trump Administration’s manufacturing jobs initiative. The new import tariffs announced in March are not the first trade policy updates of 2018. In January, tariffs on steel, aluminum, solar panels, and washing machines were set by the Administration, then a few months later, a revision to the existing policy created a 25 percent steel and 19 percent aluminum import tariffs. 2018’s tariffs affect trade partners the European Union, Mexico, and Canada, encouraging our trade partners to create retaliatory tariffs on American exports.
Current Financial State of Tariffs
According to leading economists, as reported by Reuters, no one believes the tariffs will be a financial boost to the U.S. economy. But is that also the case with regard to the manufacturing industry in particular or simply a GDP observation? Will manufacturing companies come out on top? Let’s take a more in-depth look at the resulting marketplace since the recent import tariff wars began.
On the one side of the ring you have the Trump’s import tariffs and a pending war that threatens international relations. On the other side, you have manufacturing activity that is on the upswing. Where does the fulcrum fall?
To start, the U.S. is looking to add an additional $275 billion to the GDP as a result from separate spending and tax cuts—a gain of 1.4 percent—nearly tripling the 0.5 percent GDP gain from the increased tariffs. Full employment coupled with a massive economic stimulus by Congress is increasing interest rates and strengthening the U.S. dollar.
However, these perks from the tax cuts along with regulatory rollbacks have caused a balloon in the economic growth. Enter the tariffs and the unpredictability of what these will do to the global economy. This is where the current financial state lies.