The business world is currently buzzing with the latest updates regarding trade tariffs the United States will be leveling at foreign businesses and governments, particularly China. With the tariffs taking effect just recently, it’s important to understand exactly what that means on an individual financial level for consumers and businesses.
If it hasn’t already come up yet, tariffs are essentially taxes that are aimed towards imports and exports for an individual government. And, according to an economist at The Conversation, the point of those tariffs is to increase revenue for a country’s economy. In this case, the new tariffs were purportedly created to protect US jobs in a wartime economy.
For China in particular, the tariffs are also part of a more aggressive strategy to end the “rampant intellectual property theft,” as Jeff Cox put it for CNBC.
Of course, China has its own agenda and has raised tariffs of its own against American imports, sparking a potential trade war, where opposing countries raise more and more tariffs on imports. This could have increasingly more effects on both consumers and businesses, as well as the nation’s economy.
One of the newly proposed tariffs in China would be raised against soybeans, livestock, and other common crops grown in the US. According to The Chicago Tribune, “The timing of the back-and-forth between the two countries is especially perilous for farmers across the U.S. who have experienced declining net income for almost five years.” With the tariffs in place, many farmers would be losing money in the process of growing their crops or raising livestock.
From the American tariffs, the food industry will also see a direct effect on the prices of canned goods, according to Trent Gillies at CNBC, which could affect consumer spending and some related businesses.
That being said, the effect on US businesses remains ambiguous for most. In a survey of CEOs across industries, Chief Executive found that CEOs are growing increasingly wary about the changes in the economy. Chief Executive’s Melanie Nolen reported that “it is the increasing number of CEOs predicting declines, month over month, that is sounding the warning bell, denoting what could be the beginning of a downward trend.”
Even so, CEOs are still pretty evenly divided on whether the tariffs will affect their businesses’ finances positively or negatively. For some, the effects, positive or negative, will be felt immediately, and for others, it may take some time.
Either way, it’s best to prepare for a drastic shift in the national and global economies.