The impact of the government’s actions on the nation’s trade and commerce
The retaliatory actions of the U.S government and the overall impact of new tariffs have a negative impact on commerce and trade. In December 2019, the government has delayed a scheduled tariff of 15% on Chinese goods worth $160 billion (Liu & Woo, 2018). The government later announced that it had decreased the 15% tariff to 7.5%. These actions were taken by the Trump administration, and it has a negative impact on trading relations with China. Apart from China, the government has also imposed approximately $88 billion new taxes on the citizens of America, and millions of products have been levied taxes in this manner. The additional tariffs are likely to reduce the nation’s GDP, and the unemployment rate of the country will increase as well. The economists understand the positive impact of free trade and claims that it can enhance the economic output of the nation. However, a recent increase in the tariffs can be considered as a trade barrier for domestic and international ventures.
The U.S businesses will be severely affected because tariffs usually increase prices. Additionally, rising tariffs reduce income and economic output. The U.S businesses will not receive services and goods in adequate quantities, and both producers and consumers will suffer. The overall cost of raw materials and goods will increase, and the private sector will be unable to produce enough products. The income of capital owners will reduce and consequently, they will be unable to afford adequate labor for production purposes.
Overview of the economic impact on commerce
The exporters will face issues as they will be unable to sell their products in a global environment where competition is the key to survival. They will receive lower revenues, and the nation’s economic system will be disabled. In 2018, the government decided to impose a tariff of 25% on imported steel. Additionally, it decided to impose 10% tariff on aluminium as well (BBC News, 2020). Consequently, the U.S firms would have to bear a cost of $9 billion if the imports would have been higher. The administration of Trump should understand the harmful economic impact of such retaliatory actions and understand that rising tariffs have already dampened the financial condition of the nation previously. Permanent harm to consumers and businesses is likely to worsen the situation and the need of the hour is to conduct more analysis and research on current tax policies.