A looming trade war between the United States and China has been speculated since Donald Trump claimed that the east Asian giant is “stealing” American jobs. That comment, among other remarks, pushed many to contemplate consequences for both countries, whether favorable or not.
What exactly happens in such an event remains to be seen, but with available data, it’s not too difficult to imagine changes for both nations under the new administration. For one, Trump told The New York Times about placing a 45% tax on Chinese imports.
Many economists believe such a move would lead to a “deadweight loss,” Business Insider said, which basically assumes that tariffs make winners and losers, but the total amount lost exceeds all gains in revenue and protected industries.
On Wednesday, China’s People’s Daily said (via Reuters), “If a trade war developed between the two countries, both China and the U.S. would be negatively impacted. In the end neither side would win, it would bring harm to other countries and that harm would be brought to others without benefits to the U.S. or China.”
For the American consumer, a trade war means more expensive iPhones, jeans and sex toys, BBC noted. Other items such as laptops, refrigerators, rubber boots, school supplies, umbrellas and even Christmas lights may also be affected. Capital Economics, a research consultancy based in London, predicted that Americans may need to pay up to 10% more should tariffs be set.
The picture seems clear in the case of iPhones. Foxconn, a major assembler of the line, was reportedly considering the transfer of its production plants to the U.S. In addition, it was believed that Trump would require Apple to manufacture some iPhone parts within U.S. territory.
Interestingly, one study suggested that iPhones purely made in the U.S. would only cost 5% more. Experts may also be able to predict price surges in jeans, toys and other commodities, but only time can really tell.
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