PRESIDENT TRUMP KNOWS WHAT HE WANTS from the rest of the world but it appears he may not have worked out how to achieve it.Since February 1 when new tariffs were announced, there have been rapid flip flops on policy.
Tortuous path
On April 2, ‘protectionist tariffs’ were announced on the US’ trading partners. But, on April 9 President Trump postponed implementation by ninety days, except for China. China retaliated in spite of Trump’s threat of punitive tariffs on any nation that retaliates. This set off a chain of retaliations and the tariff levels between the two escalated to 125 percent by China and 145 percent by the US.
Such tariffs make trade between these two nations unviable because the prices of items imported by them from each other could double. Even if producers reduce their margins of profit, prices would rise substantially. And, if the US dollar weakens further as a result of loss of confidence in the US economy, the inflation rate would be even higher.
The US also backtracked on high tariffs on electronic gadgets (like, mobile phones), due to its heavy dependence on their import and pressure from the CEOs of corporations. But, a day later, it announced that special tariffs would be levied on these items within two months. China escalated the trade war by restricting the exports of rare earths, a commodity in which it has a monopoly and which is crucial for manufacture of semi-conductors.
