Trump enacting sweeping tariffs on Mexico and Canada could be the beginning of a nasty trade war.
The US President's 25% tariffs on Mexico and Canada will be effective on Tuesday. He also doubled the tariff on all Chinese imports to 20% from 10%.
The question is, will these tariffs affect Jamaica? Do we get these goods, which will attract additional tariffs via the US?
Interesting days are ahead.
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Interesting good question
ReplyDeleteThis strategy is to reduce imports and encourage domestic production. It speaks to the need for countries to be more self-reliant.
ReplyDeleteThe tariffs being thrown about from the USA to its trading partners and vice-versa will most likely reflect in higher priced products and this also depends on the percentage increase in tariffs. China for example will see a 100% increase from 10% to 20% yet their products are still considered to be affordable. An extra 10% could put their prices closer to that of US companies and other competitors who produce a better quality version. This could reduce consumption of Chinese products. But China could also raise prices in other areas to offset this extra cost and prevent a price hike on their products sold in the USA.
The USA being a major market for China, China has a lot to consider. It can play out in many ways. China could also refresh trade agreements with other countries to offload any fall out with the States. The story is similar for Canada and Mexico. Do a counter-act, experience a price hike in US destined products, seek other or strengthen existing trade relationships or spread the extra cost across other markets. There are of course other options available but time will tell which route they will take.
The SIMPLE answer is it WILL affect Jamaica, et al..
DeleteIt is not a must. It doesn't have to.
DeleteTariffs will not increase the exporting countries' cost of production. They will increase the cost to consumers. Potential fall off in demand cannot be fixed by increasing prices to non-tarrif countries, as to do so would further reduce demand for the exporters' goods.
DeleteSo no, it is unlikely China, Mexico, Canada (and maybe the EU) will increase their prices to Jamaica.
Health over wealth,
ReplyDeleteThis trade war is stupid. It will impact everyone especially Americans. 40% of Americans live paycheck to paycheck. They are easily and heavily impacted by riceovements. The counter tariff responses will be crafted to inflict much pain
DeleteJamaica will be impacted through remittance fall off, increased inflation. The impact will be direct and through indirect sources. No winners. A RACE to the bottom for this hemisphere.
Agreed.
DeleteJamaica will be affected. We import more from the US than any other country. In addition a hike in prices there means consumers will pay more for goods so less disposable income. That might affect remittances Fortunately we import quite a bit directly from China. What this tells us is that we need to widen our trade links as Mecico and Canafa are doing.
ReplyDelete