Consumers in the European Union are set to pay more for targeted US imports to the bloc from today onwards. If this sounds like a bad idea, it is a response to the demand from US authorities should pay more for the importation of EU steel and aluminium goods. The idea behind the original move is that by levying a tariff on selected imports, domestic producers will be given an advantage which ought to see demand for their products rise in the domestic market. Of course, if the domestic supply can’t cope with the volume demands, quality requirements or speciality products required then customers in the USA will simply have to pay more for the imported products that they need.
The EU response is triggered by the sentiment that US tariffs on their products are simply unfair because they are marketed at a fair international price and are not being “dumped” on the US market. The Chinese authorities have been accused by the EU and the USA (amongst others) of dumping product into the international markets by selling either at a very low margin or beneath production costs. The aim of such dumping is to secure (unfairly) an increased market share and force competitors to the wall.
The EU has started to levy tariffs on some €2.8 bn worth of US exports such as orange juice, bourbon whiskey and motor bikes – notably the iconic Harley Davison range. Consumers can decide to buy cheaper products from other sources, unless they want a Harley in which case their choice is to wait until the trade war concludes or bite the bullet and pay the higher price.
India has also raised tariffs against 29 US exports in response to US tariffs against its exports from early next month.
The Trump moves is designed to appeal to the working-class demographic in the US. It is part of a mantra of US jobs for US workers, but represents an overly simplistic view of 21st century economic realities. The Trump administrations views trade imbalances with other nations as them “taking advantage” of the USA,