The tariff war has raised concerns. According to multiple sources including the British Broadcasting Corporation and Cable News Network, imposed tariffs on Chinese goods in the US including a 25 percent tariff on steel and aluminum led to retaliatory tariffs on the US goods in China including US coal and liquefied natural gas products. Additionally, increased tariffs were imposed by the United States — with the aim to increase revenue — on several goods of several other countries including Mexico and Canada, though they were later halted for a while, and there is the possibility of imposing tariffs on Europe, a crucial ally of the United States, that may lead to the tariff war without any ending of it.
But the tariff war may lead to increased prices-based, geopolitical and other impacts for the involved parties and beyond. Higher consumer prices, disrupted supply chains and inflation are often the outcomes of increased tariffs on imported goods and services. Notably, the ongoing tariff war, which started after the new US administration led by Donald Trump took office, that will increase the price of various imported goods may lead to increased prices for consumers, not only among the countries involved in it including the United States and China, the two most global economic powers, but also beyond, depending on the extent of it. Among others, tariffs and retaliatory tariffs may also lead to economic uncertainty and job losses in different tariff-imposing countries. Notably, in the earlier tariff war between the United States and China, there was economic uncertainty and job losses.
Pertinently saying, increasing tariffs is not uncommon at all, though it is often criticized for various reasons including its negative outcomes. The Smoot-Hawley tariff war took place among several countries in the 1930s. Tariffs and retaliatory tariffs were also imposed by many countries a few years ago including between the United States and China, often rendered the US-China tariff war between 2016 and 2020. But the impacts are most often borne by general people, especially low-income populations, due to their limited affordability. While many consumers in both the United States and China bore the brunt of higher prices due to increased tariffs in the previous tariff war, many will do so this time in different countries.
Photo credit: https://edition.cnn.com/.
But, importantly, the imposition of tariffs and retaliatory tariffs may also lead to backfires on the industries that are meant to be benefited through increasing tariffs on different imported goods and services and negative impacts on the relations between different involved countries, though different importing countries can also benefit from imposing the tariff and collect increased revenue. Notably, the tariff war resulted in heightened geopolitical tensions between several parties including between the United States and Xi Jinping’s China in the past. Imposed tariffs and retaliatory tariffs at this time will also lead to renewed geopolitical tensions among the involved parties — unsurprisingly.
Given the possibility of further tariffs and retaliatory tariffs because of various reasons including potential beneficial outcomes, the concerns over the tariff war need to be addressed to reduce its negative outcomes. Avoiding increased tariffs on those products or raw materials that directly and immensely affect the consumer price of low-income people will be helpful. But talks can help reduce tensions between different parties involved in the ongoing tariff war. Pertinently saying, talks between the United States and Canada and Mexico have helped pause the imposition of tariffs for now.
Amir M Sayem
Chief Editor
Dhaka Opinion Magazine
