Trumps tariffs (protectionism) (Macro)

Question 1

What were the initial tariffs imposed by Trump on Chinese goods?

Answer 1

15%, a $363bn worth due to dumping, unemployment and for trade deficit reduction.

This was part of a broader trade strategy to address perceived unfair trade practices.

Question 2

What action did Biden take regarding tariffs on electric cars?

Answer 2

Raised tariffs for any import of electric cars and associated goods (100% on cars and 50% on Iron Lithium batteries and semiconductor chips for electrical goods and AI related goods)

This relates to the infant industry argument for AI and electric cars.

Question 3

What tariffs did Trump impose in 2025?

Answer 3

Tariffs on Mexico and Canada, and 25% tariffs on all steel, aluminium, and cars, with reciprocal tariffs on all countries with a base of 10% and up to 50% on trade surplus countries.

This was part of a strategy to address trade imbalances.

Question 4

How did China respond to Trump’s tariffs following 2025 considerations?

Answer 4

Retaliated immediately to reciprocal tariffs, leading Trump to increase tariffs to 145% on all Chinese imports, with China responding with up to 125%.

This escalation marked a significant trade conflict.

Question 5

What was Trump’s goal for raising tariffs?

Answer 5

To raise US revenue to fund domestic policy for cutting taxation and reducing structural budget deficit and current account deficit.

This reflects a broader economic strategy aiming to improve fiscal health.

Question 6

What are arguments for the effectiveness of Trump’s tariffs?

Answer 6

• Will likely lead to inward investment if the protectionism is expenditure switching policy
• Increasing subsidies for climate-related goods.

These arguments suggest potential benefits for certain sectors.

Question 7

What are arguments against the effectiveness of Trump’s tariffs?

Answer 7

• High risk of retaliation targeted on sensitive industries
• Negative sum game due to supply side shocks
• Tariffs are regressive, hardest hit are those on lowest wages
• Increased inflation.

These points highlight the potential negative consequences of the tariffs.

Question 8

What was the effect of tariffs on employment in steel producing countries?

Answer 8

84,000 jobs down to 80,000 in steel producing countries.

This indicates a direct impact on job losses in specific industries.

Question 9

How did the current account change as a result of the tariffs?

Answer 9

Current account worsened due to greater loss to exports from the US than imports from China.

This reflects a negative impact on the trade balance.

Question 10

What were the demand-side effects on China due to the tariffs?

Answer 10

Demand side shocks due to less demand, potential losses in growth and unemployment.

However, the impact was less severe as exports were rerouted to other countries.

Question 11

Fill in the blank: Trump’s tariffs aimed to reduce the _______ and structural budget deficit.

Answer 11

current account deficit.