Thursday, January 23, 2020
Following the trade war with China, Trump mentions that he is interested in possibly posing automotive tariffs on European countries. The UK and Italy have discussed tax delays to prevent this from happening; however, Treasury Secretary Steven Mnuchin said that that will cause Trump to implicate the tariffs sooner. Trump is also discussing making some tax cuts again, while Jerome Powell has raised Federal Fund Rates. Trump said if they didn't GDP would have been higher. What positive or negative effects do you think economic tariffs on exports to Europe would have on our economy?
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4 comments:
I believe that imposing tariffs on US exports to Europe will ultimately bring down the demand for US goods in Europe, since those higher taxes will be translated into higher prices for those buying the goods. This may reduce the volume of exports. The positive side could be higher revenue for the US if those goods are relatively prince inelastic, and if the tariffs would not drive down demand.
I think that there will be both positive and negative impacts. I could see how this combination of these policies could make GDP higher due to the increased revenue as Sophia mentioned. But the downfall is that this is not really sustainable because it strains relations with the allies that we have. It will be interesting to watch and see what he does.
I believe this would have more of a negative impact if tariffs on US exports to Europe increased. This might cause strain on foreign relationships for the US, as well as decrease the demand of US products. If higher tariffs are placed on goods, the price will most likely increase to offset the higher cost. Higher prices might decrease the demand of US goods that are exported to Europe. Overall, the outcome looks more negative from the US perspective.
I think this would definitely hurt the European countries. While the EU is currently suffering from the Brexit and slow economic growth, this would be like putting salt on the wound of the EU. Germany has already been hurt in the exports to Britain because of Brexit. Now, with the coronavirus going on around the world, most car manufactures also concerned because China is the biggest consumer of European cars. If President Trump were to follow up with this trade tariffs, this would really hurt the EU more.
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