The Trump administration announced on Monday that for the next 90 days, Dear Leader is lowering the insane tariff he placed on all Chinese imports from 145% to 30%—enough to appease the stock market but not enough to stave off a spike in inflation and pain for American consumers.
The Trump administration, for its part, painted the agreement between the U.S. and China as a "historic trade win.” However, Americans gained nothing from this stupid endeavor, as the agreement is merely a pause in the destructive tariffs so the two countries can talk—something that could have happened without having to have had a trade war that will have lingering impacts on the supply chain and prices for American consumers.
"We expect freight rates to jump sharply in coming weeks. Plan for that, as importers surge orders to deal with backlogs and carriers try to maximize pricing power. Increases will start on ocean freight rates soon, followed by domestic trucking in July/August," Craig Fuller, a reporter who covers the freight industry, wrote in a post on X. "There could be logistics delays and challenges getting access to containers in China, truck or intermodal chassis capacity in the US, so plan accordingly. This could be very similar to late [2021/2022], as importers rightfully surge orders beyond transportation capacity."
Fuller was referring to the shipping crisis that happened in 2021, when the COVID-19 pandemic impacted Chinese manufacturing and shipping, which caused inflation in the United States thanks to shortages and price increases for freight.
What’s more, while a 30% tariff is better than the insane 145% tariff that had been in place, it is still a high number that will cause companies who make their goods in China to have to raise prices for American consumers.
“It’s all perspective and starting points. If you started at 30% tariffs on Chinese goods it would have been seen as negative. But compared to 145% it’s seen as great,” Kathy Jones, a strategist at the Schwab Center for Financial Research, wrote in a post on X.
And on top of that, the initial 145% tariffs that were in place for nearly a month caused a slowdown in imports that could cause shortages and a spike in prices as demand will outstrip supply.
"Reducing China tariffs to 30% avoids supply chain meltdown, but combined w/10% global & 25% sectoral still means: 1.) Higher consumer prices 2.) U.S. exporters less competitive globally given higher input prices 3.) Stalled investment since tariffs instantly can come back on," Brendan Duke, the senior director of federal budget policy at the Center on Budget and Policy Priorities, wrote in a post on X. "The only real solution is for Congress to take away the car keys from President Trump and reign in his power to unilaterally impose tariffs with the International Economic Emergency Powers Act."
Even Republicans admit the new lower tariff is just Trump caving after seeing that his policy was going to tank the American economy.
"Trump raised tariffs on the world, the markets, particularly the bond market—which we need to finance our debt—rebelled. Trump then was forced to back off. End of story," Fox Business correspondent Charles Gasparino wrote in a post on X. "Film at 11 of the president spinning this as a major victory. Ok sorry, I couldn't help myself. But what we have seen is a little lesson on how markets exert their power, how when you have to depend on them as we still do (and remember its really the budget deficit thats causing the trade deficit and we need the budget deficit to maintain our standard of living) you cant go to trade war with the world without bad stuff happening."
Ultimately, lowering the tariff on China is a good thing. But the tariffs are still too high, and will lead to price increases for American consumers. And it’s all because one madman doesn’t understand the concept that trade relationships are mutually beneficial.
At the end of the day, Trump started a trade war, realized it was going to tank the economy, paused the policy out of fear, and is now declaring victory for fixing a problem that he created.
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