“US President Donald Trump has made a historic decision – imposed import duties on goods from almost all countries of the world. For Ukraine, this tariff was 10%, while for other countries it varies within 10-50%. This step was not too unexpected, but still led to great resonance. American leader explains it with the need to strengthen”, – WRITE ON: ua.news
US President Donald Trump has made a historic decision – imposed import duties on goods from almost all countries of the world. For Ukraine, this tariff was 10%, while for other countries it varies within 10-50%.
This step was not too unexpected, but still led to great resonance. The American leader explains it with the need to strengthen the national economy, anticipates the “trillions of dollars” of profit and announces the “golden age” of American production.
However, the international community mostly perceived this decision as a threat to world trade. Economists warn that such actions will not only help the United States, but also cause significant harm to them – which will be reflected around the world.
What is import duties and why are they introduced? Will it really benefit America? How will Trump’s solution affect Ukraine? Political observer Ua.news Nikita Trachuk Together with the experts he dealt with the question.
What is duty and why are they administered
Import duties are an additional tax that is imposed on imported goods. The main purpose of such measures is to make imports more expensive for importers. Which, in turn, should contribute to the development of their own economy. In theory where foreign products becomes less accessible due to high taxes, domestic production should obtain impetus for development.
From a historical point of view, duties were often used as a means of protectionism – that is, artificial protection of its own market. However, the modern world economy operates differently.
In most cases, such measures not only do not strengthen the national industry, but also provoke negative consequences. In particular, a sharp increase in prices, inflation, trade wars and even major economic crises. About the future world recession – the third in 20 years – already written authoritative Western editions.
Trump and his team, imposing duties, rely on three main arguments:
At first glance, everything looks logical. But economic laws work more complicated than simple and radical political slogans that Donald Trump loves so much.
Why reality is different
First, it is worth remembering that much of imports are not just products for final consumption, but raw materials and components used by the American companies themselves. For example, the US automotive industry depends largely on foreign parts. Generally, making cars is a great illustration.
Simply put, it is impossible to just do Dodge, Lincoln or Cadillac in America. To do this, you first get a engine and gearbox from Europe (Germany or Britain). It is necessary to bring cables and wiring from Mexico or China. Electronics, chips and chips should be bought in Taiwan or South Korea. And so on. Only then can you finish and collect the same “Cadilak” or “Dodge” at the General Motors factory in any conditional Pennsylvania.
That is, raising duties will lead to the fact that manufacturers will either have to buy more expensive domestic counterparts (if any), or pay more for import. In any case, this will affect the final cost of products.
Secondly, the rise in costs will lie on the shoulders of ordinary American consumers. If prices for imported products jump, people will just pay more for the same goods. Instead of enriching the US economy, it will only reduce the purchasing power of the population. And, for the dispersal of consumer inflation.
Third, world trade is a bilateral process. If America imposes duties against other countries, it is logical to expect that they will impose mirror sanctions. Such steps are already discussed in Europe, the PRC and other countries. This works mirror and means that US companies will lose the favorable conditions for exporting their products abroad.
In the short term, the White House may receive political bonuses in the short term – some of the voters will take these measures as a manifestation of “rigid” economic policy. However, in the long run, the consequences will be extremely negative: rising prices, decrease in exports, falling production and overall decrease in economic potential.
This is not the first time the United States is applying a strict protectionism policy. America in general has aged isolationism for centuries – to mention at least the doctrine of Monroe. It seems that this historical experience has not yet been worked out by the Americans.
One of the most striking historical examples is the Law of Trouble-Gouli, adopted in 1930. Then the United States significantly increased duties on imported goods, seeking to protect its own manufacturers. The paper sounds good, but the consequences were catastrophic.
In response, European countries have imposed their duties on American goods, which led to the collapse of the US export more than twice. The trade wars caused an even deeper economic crisis in which America was then. As a result, the Great Depression has become even sharper and tough.
Similar scenarios have unfolded in other countries. For example, in the 1970s, France and the United Kingdom tried to apply duties to support domestic markets, but in the end it only slowed their economic development. That is, the main conclusion from these cases is one: in the global world related to the global economy, duties do not work. It is a tool aimed at a destructive past, not a peaceful and constructive future.
Ukraine in new conditions
The Ukrainian economy will also not stay away. 10% of goods from Ukraine, introduced by the Trump administration, will somewhat complicate the access of our products to the US market. It will hit the metallurgy and the agricultural agriculture – export -oriented industries.
In addition, in the context of trade wars and a general decrease in world turnover, investors can begin to reduce activity in foreign markets. This threatens the fall in prices for raw materials, which can affect Ukraine as exporting metals, grains and chemical products.
At the same time It should be forgotten that our exports to the US, unfortunately, are not too big. And this is to say the least: in the structure of Ukrainian exports trade with America occupies about 2%. It’s less than a billion dollars. That is, although this is all certainly affected, but not so much that the average citizen noticed it.
It is clear that Trump’s duties will only benefit individual companies in the United States, which will be able to temporarily protect themselves from competition. But in general, both the American and the world economy only loses it. And Ukraine is no exception, although the consequences for us will not be as difficult as China or Europe.
Expert opinions
MP from the Voice Party Yaroslav Zheleznyak He believes that the import duties of Trump will not significantly affect Ukraine. All because we almost do not trade with our key geopolitical ally.
“How will it hit Ukraine? Not strongly. Our exports do not even reach a billion, it is 2% of everything we export somewhere. US to us brought almost on $3 billion, 5 times more than we. Therefore, we received Light-tariff in only 10%. Most of all, we drove metallurgical products, but there is a tariff for us 25% for us since March. There are still pipes, but there is also a tariff + anti -dumping. Some more than a third of exports are agricultural and food. But there was also a new tariff since April. Therefore, this is not a disaster, especially when other conditions are worse, ”the People’s Deputy says.
Economic expert, Candidate of Economic Sciences Vadim Orphan I also agrees that Ukraine is not veryakening new American duties. At the same time, our interlocutor believes that in this way the United States opens a “Pandora box”.
“Finally, this veil of free market, free trade and globalization is ruthlessly dropped. Everyone for himself. We live in the era of global selfishness and the skin interests of states, in the era of blocks and trade wars. The globalization of the past has officially departed, and now something new will be created. I perceive this game in terms of state interests as too risky. Not sure she is well calculated. But these are their problems. If Trump wants to become a “crypto-greek”, to start rebuilding with incomprehensible consequences-we will be curious to watch. Because for the global economy, it is a fundamental solution, ”the expert comments.
There is still more interesting about Ukraine, says the orphan.
“What is our export in the US? About a billion dollars. Almost 60% Our exports are metallurgy products, mainly pipes. Somewhere in half a billion dollars. For comparison, the event gives us a 40 billion per year to cover the budget deficit. And the US think we have to compensate them for already provided assistance near $120 billion. That is not our most important problem … On the export of pipes: these tariffs specifically on pipes began to operate in early March. Who are the main exporter of the pipes? Interpipe Pinchuk, Sponsor of the Democratic Party. Ukrainian oligarchs were recruited in American policy. It’s a good lesson. Well, finally: you are sure that foreign currency revenue enters the country in the declared volumes? In particular, in Switzerland.
That is, in general, it will almost not affect us. We have much more real problems and catastrophic threats in the economy, it is so dead that we will not cause any collapse of Trump. Yes, it will hit the pocket of individual business structures. But society is unlikely to feel … We were specifically defined by the duty of 10%. Why? Because we just have nothing to take, ”Vadim summarized.
And an economic expert Yuri Gavrilechko Generally considering the situation with duties not as a problem for Ukraine, but as an opportunity. This can benefit the state if you use the conditions that have arisen.
“In the near future we will see a significant reformatting of the world market and the growth of the role of regional unions and free trade zones. And here in Ukraine there is a unique chance to take a similar situation. We can go back to the idea of ”intermore” – at least economically. In order to trade and defend their own economic interests. Ukraine can also finally try to take advantage of its transit and attractive export conditions and offer European countries to transit their goods to the US. For example, about 2%. What prevents Ukraine from inviting Europeans to place production in Ukraine and produce what they cannot do in the EU?
That is, these duties are generally an interesting opportunity for us. We export to the US worth about $875 million, of which half are metal and pipes, another part is oil. That is, we have a very simple export structure. And we import on $3.5 billion. It is worth mentioning that anti -dumping duties continue to operate against Ukraine. And if everything is reduced to 10% duties in general are less than 163% Ferromargana?! 16 times. That is an opportunity, not a problem, ”Yuri Gavrilechko is convinced.
The conclusions can be confidently stated that Trump’s decision looks like an attempt to manage a market economy by command and administrative methods that do not correspond to modern realities. World trade has long operated on the principles of the free market, and any violation of these mechanisms has serious consequences.
The imposed duties will not only help the United States, but also harm them. They will complicate their lives for their own manufacturers, make consumers pay more, cause appropriate sanctions from other countries and create preconditions for an economic downturn.
If the White House does not change approaches, the US economy may be in a situation where crisis phenomena, decline in production and deterioration of international relations will be waiting for it instead of the “golden age”. What is not very invested in Maga.
Nikita Trachuk