By now, unless you have been living in a Wifi-free deadzone, you’ve heard about the hundreds of billions in tariffs that the United States and China are flinging at one another like ninja throwing stars. When you’re hearing numbers like “100 billion dollars” it may seem like this is in an entirely different universe than the one in which you exist.
Unfortunately, that’s incorrect.
You can expect up to a 40% increase in the cost of all sorts of things. (We’ll get to those things in a moment.) First, let’s talk about tariffs so that everyone knows what’s going on.
Put simply, a tariff is a tax typically imposed on imported goods. The idea is that the tariff will make foreign-made products more expensive, driving consumers to turn to alternatives from domestic manufacturers who are not subject to the tax, and thus can charge less. In theory, this boosts the economy of the country imposing tariffs.
Trump imposed the first set of tariffs on Chinese goods to punish the country for intellectual property theft that he says has caused the U.S. economic damage…
…As of February, the U.S. also had a record-high $375.2 billion trade deficit with China, meaning it spends considerably more on Chinese imports than it makes on exports sent to China. Trump has been vocal in his desire to erase that deficit, calling it unsustainable. Tariffs are one strategy for leveling that playing field.
When Trump announced the first round of tariffs on China, it was seen as a declaration of a trade war — a progressive effort by the two nations to damage each other economically, mainly through taxes and trade restrictions. That’s why China answered Trump’s tariffs with a slew of its own taxes, and why Trump subsequently threatened to impose an additional $100 billion in tariffs on Chinese goods. (source)
So, to make a long story short, China is going to slap a tariff on things we export to them, making them up 15% or so higher in price for the consumer. This means that in all likelihood, the price increase can decrease China’s demand for the goods we export to them. (Find a list of items that the Chinese plan to charge tariffs on here.) This could hit farmers the hardest when demand for the goods they export decreases due to the higher prices.
A lobbying group for US farmers pleaded with the administration not to go forward with the tariffs, fearing retaliation by China, one of the largest buyers of US crops.
“We continue to urge the administration to listen to farmers across rural America who can’t afford new taxes on their exports,” Max Baucus, a former Democratic senator from Montana and co-chairman of Farmers for Free Trade, said in a statement. (source)
Now, in the United States, our government will add a tariff to the price of things like steel, pork, ingredients for medications, and a host of other items. When we go to the store to purchase the affected items, we’ll suffer sticker shock when we see that the price is anywhere from 10% to 40% higher than it was just a few weeks ago.
Now, let’s get to the nitty-gritty.
What will be affected?
It’s shocking to see how many essential items are dependent on foreign suppliers. There are more than 1300 products to which the US has proposed to add a 25% tariff. You can go here to find the full list and we’ll hit some of the highlights in this summary:
- Tires, tire retreading products, all rubber products including but not limited to stoppers, caps, lids, hoses, belts, tubes, pipes etc. This will affect everything that rolls or is contained.
- Antifreeze and de-icing fluids
- Iron and iron alloys and steel products
- Aluminum and alloys
- Nuclear reactors and parts
- Central heating units and parts, furnace burners and all parts, furnaces, ovens, and water heaters,
- Turbines of all kinds, combustion piston engines, ignitions, compressors
- Hydraulic engines, pneumatic engines, turbo engines
- Pumps of all kinds
- Machinery for food production commercial and home use
- Papermaking and bookmaking, anything printed
- Cartons, boxes, containers for mailing and shipping
- Textile machines, any and everything to do with needlework of any kind in textiles
- Metalworks: Anything to do with machinery involved in this industry, drilling, milling, grinding, smoothing, shaping, punching, polishing, etc.
- Woodworking machinery of any all kinds
- Cast iron parts and products
- Chainsaws and parts
- Cash registers
- Anything to do with computers, electronics, magnetic storage, whole or in parts
- Medical devices
- Car computer components,
- Concrete mixers
- Earthmoving, crushing, grinding, and sorting machinery of all kinds
- Glass optic machinery
- Assembly machinery of all kinds
- Vacuum molding machinery
- Thermoforming machinery
- Rope and cable manufacturing machinery, both metal and fiber
- Floor polishers,
- Trash compactors
- Ball bearings
- Electric motors
- Generators of all applications from large to small
- Lab equipment for all applications
- Broadcast equipment
- Safety control equipment (flight record data box for example)
- Railway and shipping equipment of any and all types
- Motor vehicles of all kinds. If it rolls it’s on the list.
- If it flies it’s on the list as well as the parts to repair or assemble
- If it floats it’s on the list.
- Satellites of all kinds and all parts
And it isn’t just mechanical goods and electronics. A large number of medications and medical supplies will be affected:
- Coenzyme Q10 (ubidecarenone) heart health supplement increases oxygen
- Quinone drugs including Malaria testing kits
- Aromatic drugs derived from carboxylic acids with additional oxygen function, and their derivatives
- Amfetamine (INN) benzfetamine (INN), dexamfetamine (INN), etilamfetamine used to treat ADHD, hyperactivity, narcolepsy, athletic performance and cognitive enhancer
- antidepressants, tranquilizers and other psychotherapeutic agents, monoamine drugs
- cardiovascular drugs of amino-compounds with oxygen function
- dermatological agents and local anesthetics
- oxygen increase breathing drugs for cardio patients and asthmatics
- Anesthesia drugs
- Thyroid drugs, hormone drugs
- TB drugs
- Anti-malaria drugs
- Immunological products and drugs
- Vaccines for human medicine
- Vaccines for veterinary medicine
- Human blood; animal blood prepared for therapeutic, prophylactic, diagnostic uses; toxins, cultures of micro-organisms
- Diabetes drugs, testing strips, syringes
- Asthma drugs
- Ephedrine, pseudoephedrine, norephedrine – vasodilators
- Other medications containing alkaloids or derivatives
- Medicaments containing vitamin B2 synthesized from aromatic or mod. aromatic compounds, in dosage form or packed for retail
- Medicaments containing vitamin B12 synthesized from aromatic or mod. aromatic compounds, in dosage form or packed for retail
- Medicaments containing vitamin E synthesized from aromatic or mod. aromatic compounds, in dosage form or packed
- Adhesive dressings and other articles having an adhesive layer, coated or impregnated with pharmaceutical substances, packed for retail
- Triethanolamine will affect surfactants (any detergent), emulsifiers, and cosmetics
- Sterile surgical catgut, suture materials, tissue adhesives for wound closure, laminaria, laminaria tents, and absorbable hemostatic.
- Algins used as thickening or stabilizing agents in foodstuffs and other products.
- Drugs used to dilate the cervix
- Blood-grouping reagents – medical blood tests
- Opacifying preparation for X-ray examination; diagnostic reagent designed to be administered to the patient such as Barium for GI series, dyes, and stains for other radiologic tests
- Antigens or antisera antiserum. A serum containing antibodies that are specific for one or more antigens. Also called immune serum. Human or animal serum containing one or more antibodies that are specific for one or more antigens and are administered to confer immunity.
- Thorium – coats tungsten filaments used in old-fashioned light bulbs, TV’s, electronics, etc.
- Dental cement and other dental fillings; bone reconstruction cement
- Chemical contraceptive preparations based on hormones or spermicides, birth control
- Gel preparation use human/veterinary medicine lubricant in surgical operations, physical exam, or coupling agent between body & medical instrument, such as KY Jelly
- Appliances identifiable for ostomy use
Are we screwed?
Maybe, maybe not. There’s no easy answer.
First of all, this hasn’t happened yet. It probably will, but so far these tariffs don’t exist. However, I advise you plan like it’s a “done deal.” If there are things you’ll be purchasing anyway, it doesn’t hurt to get ahead.
Secondly, this may end up creating more industry and jobs in the US. It’s really impossible to say whether that will be the end result or not. But one thing is sure, and I’ve written about it numerous times: consuming more than we produce is a dangerous way to live.
Finally, many of these things are products that we’ve lived without for centuries. Your budget may be tighter, your expenses may be higher, or you may just end up finding a workaround. It’s important to know about these things, but it’s even more important not to panic and to use this knowledge to empower yourself. You may have to revisit your budget if any of these things are essential and figure out where to cut so that you can still afford to purchase the needed items.
How do we prep for this?
Read over the lists above and take the time to go over to the government’s press release and read it over. When you’re reading, make a list of the items most likely to affect you and your family.
Then consider the following:
- Is the item essential?
- Can you stockpile it ahead of time?
- Can you make it yourself?
- Can you acquire it in another way?
- What are the alternatives?
Make a plan NOW before things get more expensive or shortages occur.
Will these proposed tariffs affect you?
Are you concerned that a particular item on the list will hit your family especially hard? How do you plan to prepare for potential price increases or shortages? Do you think Trump and China will back down, or do you think the trade war is on?
Share your thoughts in the comments below.