By Christopher Rugaber and Paul Wiseman, Associated Press
Washington (AP) – After weeks of anticipation and speculation, President Donald Trump followed his reciprocal pricing threats by declaring a 10% reference tax on Wednesday on imports from all countries and higher rate rates on dozens of nations that execute business surpluses with the United States.
By announcing the reciprocal prices, Trump made a key campaign promise by increasing American taxes on foreign products to reduce the gap with the prices that the White House affirms that other countries impose unfairly on American products.
“Reciprocal means” they do it and we do on Wednesday, “said the president of the Rose Garden White Rose Garden.
Trump’s highest rates would reach foreign entities that sell more goods in the United States than they buy. But economists do not share Trump’s enthusiasm for prices because they are a tax on importers who are generally transmitted to consumers. It is possible, however, that reciprocal prices can bring other countries to the table and lead them to lower their own import taxes.
The Associated Press asked your questions about reciprocal prices. Here are some of them, as well as our answers:
Do the rates collected in the United States enter the General Revenue Fund? Can Trump withdraw money from this unattended fund?
The prices are taxes on imports, collected when foreign goods cross the American border by the customs agency and border protection. Money – about $ 80 billion last year – goes to the US Treasury to help pay the expenses of the federal government. Congress has the power to say how money will be spent.
Trump – Widely supported by republican legislators who control the US Senate and the House of Representatives – wants to use increased tariff income to finance tax reductions which, according to analysts, would benefit disproportionately to the rich. More specifically, they want to prolong the tax reductions adopted at the first Mandate of Trump and are largely expressed at the end of the end of 2025. The Tax Foundation, a non -partisan reflection group in Washington, noted that the extension of Trump tax reductions would reduce federal income of $ 4.5 billion from 2025 to 2034.
Trump wants higher prices to help compensate for the lower tax collections. Another reflection group, the tax policy center, said that the extension of 2017 tax reductions would provide continuous tax assistance to Americans at all income levels, “but high income households would receive a greater advantage.”
To what extent will prices increase following the pricing policy?
It depends on how businesses in the United States and abroad react, but consumers could see overall prices increase in a month or two of the prices imposed. For some products, such as Mexico products, prices could increase much faster after prices take effect.
https://www.youtube.com/watch?v=hvnlokc0_s4
Some American retailers and other importers can eat part of the cost of the price, and exporters abroad can reduce their prices to compensate for additional tasks. But for many companies, the prices that Trump announced Wednesday – as 20% on imports in Europe – will be too important to swallow by themselves.
Companies can also use prices as an excuse to increase prices. When Trump slapped tasks on washing machines in 2018, studies later showed that retailers had increased the prices of washer and dryers, even if there were no new tasks on dryers.
A key question in the coming months is whether something similar will happen again. Economists fear that consumers, who have just experienced the largest inflationary peak in four decades, are more accustomed to prices than before the pandemic.
However, there are also signs that the Americans, pushed by the increase in the cost of living, are less willing to accept price increases and will simply reduce their purchases. This could discourage companies from increasing prices a lot.
What is the limit of the executive power to implement the prices? Does Congress play no role?
The American Constitution grants the power to set prices to the Congress. But over the years, Congress has delegated this powers to the President through several different laws. These laws specify the circumstances in which the White House can impose prices, which are generally limited to cases where imports threaten national security or seriously harm a specific industry.
In the past, the presidents generally imposed prices only after having carried out public hearings to determine whether certain imports met these criteria. Trump followed these steps when pricing during his first mandate.
In his second mandate, however, Trump sought to use the emergency powers set out in a 1977 law to impose prices in a more ad hoc manner. Trump said, for example, that the fentanyl flowing from Canada and Mexico is a national emergency and used this pretext to impose 25% tasks on the goods of both countries.
The congress can seek to cancel an emergency that president declares, and Senator Tim Kaine, a democrat of Virginia, proposed to do so concerning Canada. This legislation could adopt the Senate but would probably die in the House. Other bills in the congress which would also limit the authority of the president to fix prices are also faced with difficult chances for the passage.
What rates do other countries invite American products?
American prices are generally lower than those invoiced by other countries. The average American price, weighted to reflect goods that are really exchanged, is only 2.2% for the United States, against 2.7% of the European Union, 3% of China and 12% of India, according to the World Trade Organization.
Other countries also tend to do more than the United States to protect its farmers with high prices. The American price weighted by trade on agricultural products, for example, is 4%, compared to 8.4% of the EU, 12.6% of Japan, 13.1% in China and 65% of India. (WTO figures do not have the recent wave of Trump import taxes between countries that have concluded their own free trade agreements, such as the American-Mexican-Canada agreement which allows many goods to cross North American borders.)
Previous American administrations have agreed prices that Trump now calls unfair. They are the result of a long negotiation between 1986 and 1994 – the so -called Round Uruguay – which ended with a commercial pact signed by 123 countries and formed the basis of the global trade system for almost four decades.
Originally published:
California Daily Newspapers
