It all started with campaign promises: To curb China’s “unfair trade practices” and “make America great again.” Typically campaign promises don’t make it into U.S. policy, but when President Trump entered office in January 2017, one of his first actions as president of the United States was to issue a series of executive orders calling for tighter tariff enforcement and for a review of U.S. trade deficits and their causes.
Now at the tail end of his first term, and despite a deal being reached to create a new North American trade agreement, President Trump hasn’t created a better trade deal with China and another tariff increase is set to go into effect right before the holiday season.
Let’s break this down. What exactly is a tariff? The dictionary defines a tariff as “a schedule of duties imposed by a government on imported or in some countries exported goods.” Basically, it’s a tax paid by whoever chooses to import a specific product into their country, and often this added cost gets passed down to the consumer.
After the U.S. and China’s failure to agree on steps to reduce the U.S.’s trade deficit coupled with percent President Trump’s order for a formal investigation into China’s intellectual property theft, the first round of tariffs were announced. All imported washing machines and solar panels were hit with the first tariffs of the trade war. Then came 25 percent tariffs on steel imports and 10 percent on aluminum.
Up until this point, the tariffs enacted by the United States had been aimed at all countries, not just China. But on April 2, 2018, China hit back with its own set of tariffs aimed at the United States, this time imposing up to 25 percent on 128 U.S. products. Cue the retaliatory tariffs.
The total cost of Trump’s trade war has cost American consumers and businesses $38 billion since it first began. In September alone, Americans paid $7.1 billion in tariffs and households are paying up to $1,000 a year. The American farm economy has arguably been hit the most. Bankruptcies are up 24 percent, the highest level since 2011, and commodity prices are at rock bottom.
“U.S. agriculture is at a growing risk of both further losing market share in China, but also not being able to regain that share back,” said Decker Walker, a partner and managing director at Boston Consulting Group.
So, where do negotiations stand now? Up until recently, the Trump administration was calling for a trade deal with China to be completed while both countries were in Chile for the Asia-Pacific Economic Cooperation Summit. That has since been cancelled.
While at the NATO summit in London, the president recently raised the prospect of waiting until after the 2020 election to come to a deal with China saying, “”In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right.”
So now Americans have to wait and see. The remaining talks are shrouded in secrecy, further raising doubts a deal will be reached at all. The December 15 tariff increase for all Chinese goods is looming, and the hit Americans are taking to their wallets will likely increase. If one thing is clear, it’s that the American people are paying the price for Trump’s trade war and there’s seemingly no end in sight.