The Impact of Tariffs
America has been the leader of the global free trade for decades, but that is beginning to change. The United States has levied tariffs on all 5 of our largest trading partners. Canada, China, Japan, Europe, and China. All but Japan have retaliated with tariffs of their own. Tariffs are a ultimately a tax on American consumers and businesses.
International Mail Companies & The Auto Industry
So far, there is no impact to international mail, but if trade declines between countries so will mail volumes. The tariffs are likely to have the biggest impact to the automotive industry. Automobiles are the US’s 3rd largest export. The majority of US auto exports are sent to our largest trading partners (Canada, China, Mexico, and Germany.) The tariffs will likely decrease exports, and in the long term move manufacturing to other countries. The EU has imposed tariffs on $3.2 billion of US imports, and some predictions are that tariffs could rise to $300 billion if a resolution cannot be reached.
The tariffs are designed to increase manufacturing and consumption of domestic goods. A decrease in imports also come at a cost. US ports and border crossings would being doing less business. The creation of new manufacturing jobs would likely come at the expense of the rail, bridge, and port businesses.
Cost of Postage to Canada
The cost of postage to Canada has not changed. Canada has long been our largest trading partner and closest ally. In retaliation to tariffs being applied to goods from our largest trading partner, Canada has imposed tariffs of their own on $12.6 billion worth of US products. Most notable is the 25% tariff on US Steel, but a wide variety of products are now subject to a 10% tariff. See the items detailed below:
Aluminum / Yogurt / Coffee / Beef / Maple Syrup / Candy & Chocolates / Pizza / Cucumbers / Strawberry Jam / Orange Juice / Ketchup / Mayonnaise / Salad Dressing / Condiments & Sauces / Whiskies / Candles / Dishwasher Detergents / Glues & Adhesives / Insecticides / Fungicides / Herbicides / Plastic bags / Table & Kitchenware / Plywood / Toilet Paper / Handkerchiefs / Facial Tissues / Towels / Tablecloths / Printed Postcards / Greeting Cards / Cast Iron Grilles / Refrigerators / Water Heaters / Dish Washers / Lawn Mowers / Dryers / Boats / Chairs / Mattresses / Pillows & Cushions / Bedding / Playing Cards / Pens
Chinese imports benefit from low postage rates to the US. Often times it is less costly to send mail from China than to mail domestically within the United States. Export postage to China is drastically higher than what it costs to import from China. There are some discounted rates available, especially for savvy print & e-Commerce companies. ( Learn more ) This coupled with high tariffs on many US goods has resulted in a large trade deficit. It does however, keep prices competitive and domestic producers searching for new innovations.
July 6th saw a 25 percent tariff on 818 Chinese imports, worth $34 billion a year. China retaliated with tariffs of their own. There is evidence that China subsidizes key industries allowing state-owned businesses to overproduce and undercut market prices. They also force foreign companies that want to do business in China to share key technologies. The consensus from economists is that tariffs are not a viable solution. The best solution may come from the WTO. The United States should enlist the help of our largest trading allies Europe, Canada, Japan to push for changes in the Chinese government’s economic scheming. China usually complies with WTO ordered remedies, and the US wins about 90% of the cases they present to the WTO against them.
History has proven that there are no winners in a trade war. There is a delicate balance. It makes sense to negotiate tariff rates as part of trade deals, but we cannot risk a global economic trade war.