Goldman Sachs says a trade war with China could hit US profits, underlines three critical points; here are all details
Will Trump tariffs really come into play?
Trump, since the election campaign, has been touring the country and collecting grievances of US producers, and came to a decision that the best bid to save local industries would be to introduce high tariffs for products exported from other countries, especially Canada, Mexico and China.
These are the three countries from where the majority of produce across different categories, arrive into US soil. However, there are severe fears of inflation in the US market once these Trump tariffs come into implementation, as prices of products would likely go up, as exports from these countries are cheaper than those made inside the US.
What could a trade war mean for China and US?
Meanwhile, Goldman Sachs is of the opinion that there is a 90% chance that Trump will introduce the proposed tariffs and there are a few ways how a trade war with China could help the US earn more profits. For starters, Trump tariffs will help in increasing the demand for locally-produced products, which will increase production rates within the US, that would in turn, increase both outputs and profits in the country, strengthening the US economy.
However, the trade war and retaliatory tariffs may not help US exporters, as they may fall into into Beijing’s retaliatory crosshairs. Therefore, if American exporters are to get any relaxations, Trump needs to work a way around that and help the economy even further.
FAQs:
What are Trump tariffs?
When the US Presidential election campaigns were on, Donald Trump had promised US citizens that he would be imposing a lot of tariffs on imported products, from China, Canada and Mexico, in order to save the local industries of the US. Will Trump tariffs lead to inflation?
There are high chances that imported goods from other countries, which are cheaper than locally-made products, would see a major rise in prices after Trump imposes import tariffs. This could then lead to an inflation in the US, suggest reports.
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