Here’s exactly how Trump’s trade war with China could affect you

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A trade war between the US and China has been heating up this year, with the US levying tariffs on $250 billion of imported goods from China and China retaliating with tariffs on $110 billion of US goods.
Tariffs can increase the price of goods, which can have serious economic effects.
Several economists and business groups have warned that higher prices from tariffs can hurt American firms and consumers, but the Trump administration continues to defend its policies.
Experts predict that some of the first prices to rise will be on computers and computer parts, furniture, and tires.

A trade war between the US and China has been heating up for much of this year, and it could have huge impacts on the US economy.

President Donald Trump’s administration has levied tariffs on a total of $250 billion of imported goods from China. That represents about half of all imports from China.

China has retaliated by announcing tariffs on $110 billion of US exports.

Tariffs affect the economy

Both Trump’s tariffs on China and China’s retaliatory tariffs are likely to impact the economy in various ways. At the most basic level, tariffs increase the prices of goods, directly by making imported goods more expensive via the imposed tax, and indirectly by allowing domestic manufacturers who do not have to pay the tariff to charge higher prices.

Indeed, that latter effect is the main argument in favor of tariffs: By being able to charge higher prices, domestic producers can theoretically become more profitable and invest more in factories and workers.

However, those higher prices can either be passed on to consumers or absorbed by companies buying intermediate products, which can cause economic harm.

For example, Ford says that a separate set of tariffs on steel and aluminum imposed by the Trump administration this spring will likely cost the automaker $1 billion, according to a CBS News report.

Higher prices could hit consumers’ wallets

The most recent set of tariffs against Chinese imports, which went into effect at the end of September, targeted around $200 billion of goods with a 10% tax scheduled to increase to 25% on January 1, 2019.

Unlike earlier rounds of tariffs that mostly targeted materials and intermediate goods, about a quarter of the new tariffs target consumer goods directly, according to an analysis by the Peterson Institute for International Economics.

Those tariffs could have an even more direct impact on Americans’ wallets than the earlier round of tariffs, which were mostly against industrial products and intermediate goods.

Some of the goods that are likely to be hardest hit by the newer tariffs include computers and computer parts, furniture, and tires.

Economists, including Ian Sheperdson of Pantheon Macroeconomics, suggest that consumers could see price increases as a result of tariffs on those goods.

“We don’t know for sure how quickly importers will raise wholesale prices of the affected items, or how quickly manufacturers of substitutes for Chinese products will lift their prices,” Sheperdson wrote in a note to clients.

Sheperdson estimated that the newer round of tariffs could …read more

Source:: Business Insider


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