US President Donald Trump’s tariffs could have an impact on global trade.
By imposing a tariff, a country effectively imposes a tax on goods imported from another country.
It is well known that importers are responsible for paying these tariffs when these shipments arrive and are likely to pass the cost on to consumers in the form of higher prices.
But there is another consequence here.
There is a potential cycle of retaliation or a trade war, with a sanctioning country deciding to retaliate with its own tariffs, writes skynews, reports Telegraph.
Supply chains could also be disrupted.
And that could lead to higher prices as it increases inflation.
Why were the tariffs imposed?
Trump’s executive orders say the tariffs are a consequence of illegal immigration and drug smuggling – two of the main promises he was elected on.
It should be noted that this is not a rationale that everyone agrees with.
In Mexico, Trump says that drug traffickers and the country’s government “have an intolerable alliance” that in turn affects national security in the US.
While with Canada, he says that Mexican cartels are operating in that country.
And then with China, he says that the country’s government provides a “safe haven” for criminal organizations.
