Ukraine exported goods worth $900 million to the US. Trump’s tariffs will mostly hit small enterprises.
US President Donald Trump on Wednesday announced tariffs on almost all countries in the world, including levies that exceed 30% on Asian economies such as China, Taiwan, Vietnam and Thailand.
The tariffs will be two-tiered. First, there will be a 10% baseline tariff on all countries. A higher reciprocal tariff will be charged on roughly 60 countries – those with which the US has the largest trade deficits. For instance, China’s total tariffs against the US were calculated by Trump’s team to be 67%, so the new tariffs would be half that, at 34%.
In a media event in the Rose Garden of the White House, Trump declared it to be “Liberation Day in America.”
Although economists cannot tell the future impacts of the tariffs, the only preliminary consequence is that they will initially be more hurtful to the US, escalating inflation, and acting as an additional tax on consumers.
Tariffs will result in a sharp price increase for US consumers, Yurii Gaidai, a senior economist at the Center for Economic Strategy wrote in his Facebook post.
“For many categories of American imports, substitution is either impossible or will be significantly delayed. For example, half of the spare parts for American automakers are imported. I’ve seen estimates suggesting that relocating the production of even 10% of these parts to the US would take three years and require over $100 billion in investments. And that’s just a small fraction of auto parts,” he wrote.
The price increase for goods will also lead to a drop in demand, he wrote.
A drop in demand will also worsen consumer sentiment. This will add up to a fall that was already reported by the University of Michigan, when consumer sentiment hit the lowest since November 2022.
“Overall, predicting all the effects accurately is difficult. But one thing is certain: the efficiency of the global economy will decline. Humanity’s overall prosperity will decline,” Gaidai wrote.
Source: Kyiv Post.
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