Trump’s Trade War Escalates
It’s no secret that the Trump administration has had some sharp rhetoric regarding China’s economic model. The current administration wants to see China stop its “unfair” trade practices, open its market, and engage in true free market competition. Flaming rhetoric alone, however, provides China scant incentive for trade reform. Tariffs have become Trump’s weapon of choice in his economic battle with China. $35 billion in tariffs have already been set, with another $200 billion on the way. China has threatened to retaliate by levying matching tariffs against US products. The casualties of this “trade war” aren’t limited to large corporations. The stock market has taken a hit due to the tariffs, which can be felt by anyone with a 401k, IRA, or who dabbles in the market.
There are some winners in the trade war. Domestic industries are able to better compete with Chinese products when those products are taxed via tariff. But it’s important to also keep in mind that the consumer has to pay more for the same product because of tariffs. So, while tariffs might be an effective means of coercing foreign countries, they have the potential of negatively effecting the consumer while benefiting domestic industry.
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