President-elect Donald Trump plans to implement new tariffs against Canada, Mexico and China, three of America's leading trading partners, in a post on social media network Truth Social.
Mr. Trump expressed plans to sign an executive order placing 25% tariffs on all goods imported from Canada and Mexico, with an additional 10% tariff on goods from China.
During his campaign, Mr. Trump suggested raising tariffs by at least 25%, which could rise to 100%, on goods made in Mexico, and suggested that anything made abroad may be hit with a 60% tariff.
As a result, some companies have reported plans to cut Chinese manufacturing down by 50% or more, while others have started stockpiling inventory amid fears of costly tariffs.
During Mr. Trump's first presidency, his administration imposed tariffs that left 60% of U.S.-China trade subject to 20% tariffs. Researchers believe that it may take years to fully assess the success of these policies, according to a Dec. 2 report from the Harvard Business Review.
Here are three known impacts of the last Trump administration's tariff rules on the U.S. supply chain:
1. Tariffs did not lower the cost of Chinese imports and consumers paid more for goods. According to research, American consumers dealt with the brunt of tariffs Mr. Trump set in his first term. Chinese exporters kept prices steady, which caused U.S. importers to pay more for goods from China. In turn, those costs were passed to consumers. Effects of the raised costs were different among different kinds of consumer goods.
2. Manufacturing jobs did not return to the U.S. Researchers determined that while U.S. regions home to targeted industries saw no effects on employment or earnings as a result of Trump-era tariffs, Chinese retaliation harmed U.S. agriculture, and that that harm was only slightly mitigated by government compensation. There were three key reasons jobs did not return to the U.S. First, since tariffs targeted China, importers moved production to other Asian countries, including Vietnam. Second, there weren’t U.S. factory spaces with free capacity to manufacture products previously imported from China. Third, if companies were to move manufacturing out of China, it is not guaranteed it would move to U.S. post-industrial cities that formerly dominated manufacturing.
3. Sectors targeted by retaliatory tariffs were hurt. Retaliatory tariffs reduced employment in agriculture, transportation, warehousing and business services in affected regions, according to the report. U.S. exporters were forced to cut prices to stay competitive, while China was able to find other sources for commodities. U.S. producers had less leverage to keep prices static, as they faced competition from other locations.