Analysts said e-commerce companies may be the worst hit from Washington's 10% tariff on imports from China while the 25% tariffs imposed by the US on Canadian and Mexican goods as well will result in a lose-lose trade war.
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00:00I think it's fair to say that this is a lose-lose trade war.
00:28Both U.S. consumers and also Canadian and Mexican households stand to lose.
00:34The Tax Policy Center has just put out an analysis suggesting that after-tax U.S. household
00:39income could fall by 1% as a result of these tariffs.
00:43That's a cost of about $1,000 to the average U.S. household.
00:47So it's not a huge hit for American households, but it is likely to make them worse off.
00:52And then for Canada and Mexico, because the U.S. is by far their biggest trading partner,
00:57they're even more exposed to these taxes.
00:59It's going to make it harder for firms from those countries to export to the U.S.
01:04And also the retaliatory tariffs that are now going to be put in place will increase
01:08costs for consumers in those countries.
01:10I think there are kind of two major possibilities.
01:13One is what happened with the U.S.-China trade war during Trump's first term as president,
01:17which is both the U.S. and China increased tariffs.
01:21And then those tariffs have stayed there, and they are now kind of a permanent feature
01:26of the trade landscape.
01:27So one possibility is that the higher tariffs are here to stay.
01:31The more hopeful possibility will be that governments realize the costs that these tariffs
01:38may impose and try to reach a negotiated solution to remove the tariffs.
01:43So I think the Canadian and Mexican governments will be trying to talk with their U.S. counterparts
01:51and work out kind of what kind of a deal could we reach that would allow both sides to remove
01:56the tariff.
01:57When you look at the executive order that the Trump administration did, it revoked the
02:00de minimis allowance for e-commerce goods into the U.S., such as Timu and Shein.
02:07So the biggest hit will be those players, as well as Amazon, which ship a lot of those
02:11goods into the States.
02:13The players that will benefit most from this are companies that make those products domestically
02:18or other companies that may make raw materials or other intermediate inputs that go into
02:23the supply chains of the U.S.
02:24So the roadmap of tariffs moving forward is we expect that the U.S. will continue to put
02:28tariffs on most countries that they have a trade deficit with, particularly large.
02:32Think of the European Union, where the U.S. has a trade deficit with.
02:36Think of Vietnam, Thailand, these countries, Australia to some degree.
02:40And part of that is because the U.S. feels taken advantage of.
02:43They are taking our resources and our money, but not necessarily treating us in a fair way.
02:48Some of that is market access, others are just the fact of fentanyl.
02:53The U.S. is really unhappy with the fentanyl use because it's killing Americans.
02:59And so we're at the point now where the Trump administration feels emboldened to actually
03:02do something about it.