U.K. Prime Minister Theresa May is planning to hold more trade talks with Donald Trump this week at the G7 meeting
These talks come on the back of the US government imposing increased Tariffs on Steel ( 25%) and Aluminium (10%). The U.K. Prime Minister has stated her expressed disappointment at the decision to slap higher taxes on these products.
Backing up the U.K. stance, the French President, Emmanuel Macron, has called President Trump to tell him the tariffs were “illegal”, while the Canadian Prime Minister, Justin Trudeau, has said the US move is “totally unacceptable”. China has warned that any trade talks between China and US would be cancelled if these trade sanctions are activated.
It does seem that President Trump is in no mood to “back down” as he has recently tweeted that the US had been “ripped off by other countries for years on trade”. He has said that the steel tariffs will protect US steel makers’ jobs, which he considers to be a national security issue.
So what is a trade war?
It is when countries fight each other with taxes and quotas. This can hurt trading countries and lead to political tensions.
What are tariffs?
Taxes on goods made abroad. Taxing goods on entry (imports) makes people think again before purchasing. The theory is that people will buy cheaper, locally produced goods, thereby boosting their country’s economy.
What’s a trade deficit?
The amount by which the value of a country’s imports exceeds the value of its exports.
In response to these tariffs imposed by the US, the EU has issued a 24 page list of “tit-for-tat” tariff increases across a wide spectrum of US-made products, including iconic names such as Harley Davidson motorbikes and products such as bourbon.
This weeks G7 conference should be very interesting!
By Mike Court
Mike Court is International Trade Compliance Specialist at International Trade Matters Ltd.