Increasing tariffs and trade war raise concern of an economic recession
The Federal Reserve Bank of New York released a report this past May, estimating new tariffs on over $250 billion in imported goods would cost American households an average of $831 per year. That equates to an estimated $106 billion additional expenditure for households annually. Recent tariffs have focused on Chinese goods.
A tariff is a tax placed on on imported goods, in this case for Chinese goods. Those costs are often carried through to the consumer, giving way to the Federal Reserve’s estimate of the increased yearly expenses for Americans.
A Wall Street Journal article from reporter Chao Deng analyzed the efforts made by businesses to absorb increased costs. Per the report, companies largely avoided initial 10% tariffs from harming businesses through cost cutting. However, the increase to 25% tariffs – a key economic policy of the Trump Administration – is proving too significant.
While suppliers, importers, and retailers attempt to gain exemptions for products, the U.S. announced a delay in tariffs on laptops and other electronics until December. One key issue are rare earths – a mineral resource vital to the production of electronics, and almost exclusively supplied by China, according to reporting from the Financial Times. China has threatened to cut off this vital artery, which would seriously harm U.S. electronics manufacturers.
The increase in costs, as well as China’s decision to end the import of U.S. agricultural products, is likely to push that $831 up. President Trump paused a new hike in tariffs on Chinese goods in response to concerns of an impending recession. How do you think your representatives in Congress should respond?