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Trump’s New Tariffs

What is a tariff, and why does the president use them?

By:  |  December 5, 2019  |    332 Words
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(Photo by Chip Somodevilla/Getty Images)

President Donald Trump suddenly tweeted this week that he would be putting tariffs on steel and aluminum exports from Argentina and Brazil. He pointed out that the South American countries are devaluing their currencies, leaving U.S. industries at a disadvantage.

Brazilian President Jair Bolsonaro confirmed that he is meeting with his economy minister to discuss the tariffs. Bolsonaro said he maintains “an open channel” with President Trump, but it is unclear if he will be able to dissuade Trump.

Both nations had received exemptions from the 25% steel tariffs and the 10% aluminum tariffs introduced in May 2018.

What is a Tariff?

A tariff is a tax applied to imports (bringing in) or exports (sending out) of goods and services between two countries. There are many purposes behind tariffs. They can protect a country’s industry from foreign competition, apply political pressure to trading partners, and raise money for the government.

Some economists say that tariffs do not work because they raise prices and therefore hurt consumers and businesses in the country that is imposing these taxes. Those who support tariffs argue that the taxes are needed to prevent unfair trade.

Depending on the size of the two countries, tariffs can seriously impact global commerce.

Tariff Man

In December 2018, President Trump referred to himself on Twitter as a “Tariff Man.” He has used this powerful trade tool as a form of pressure to garner influence over friends and foes. So far, the results from his tariffs have been mixed.

Earlier this year, Trump threatened to apply tariffs to Mexican goods unless that country curbed illegal migration to the United States. Mexico agreed, and the tariffs were stopped. For the last 18 months, Washington has slapped tariffs as high as 30% on Chinese goods. Even though China is negotiating a trade deal with the U.S., Trump still has not reduced the pressure.

Overall, the president has used tariffs more than any president who came before him. We can only objectively measure the results as time passes.

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