American trade policy will likely result in more tariffs in 2020.
President Trump’s tariffs have cost American companies $42 billion to date, and that figure could rise higher when new tariffs are put in place. And that’s not a question of if, but when.
Already, there have been talks about U.S. retaliatory action over digital services tax imposed by France and Italy on American tech giants. As of now, U.S. firms mostly have felt the effect of tariffs stemming from the trade dispute with China. A report from Tariffs Hurt the Heartland says the trade war cost American consumers and businesses $42 billion through the end of October.
That’s in contrast to Trump’s claims that American consumers are “paying nothing.” In truth, “U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers,” a study from the National Bureau of Economic Research said.
Tensions between the U.S. and China have eased somewhat, and China’s vice premier Liu He is scheduled to sign a Phase One trade agreement on Jan. 15 in Washington, D.C. So far, there’s no word yet on a timetable to get a Phase Two agreement officially inked. The Phase One deal cuts the 15 percent tariff imposed on Chinese imports last September to half, and the tariffs that were slated to begin on December are on hold. The 25 percent tariffs on $250 billion in Chinese imports, including handbags and furniture, remain in place.
But with digital services tax seemingly on the rise, it appears only a matter of time before the U.S. puts retaliatory tariffs in place. That rise in costs will also be borne by U.S. consumers and businesses.
“A worsening of trade relations between the U.S. and the European Union could be the defining factor for global trade policy in 2020,” S&P’s report, “2020 Trade Outlook–Trump’s Trade Wars,” said.
Currently, the U.S. has implemented wide-ranging tariffs connected to a World Trade Organization case, and the EU could in turn exact some tariffs of its own when its case moves further along the legal pipeline. But the bigger concern seems to be the digital services tax that’s making the rounds as countries look for new sources of revenue to bolster their coffers and balance governmental budgets.