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USA, China and the money…

A long-lasting fight between USA and China is still ongoing.
Trading between these two countries has never been more
complicated and penalty taxes are the non-violent weapons.
But does the USA get what they want?

Trading with the USA has never been more complicated since Donald Trump found an effective way to push the “America first” label. Introducing penalty taxes on various goods seems to be an effective way to control when and where to buy. Initially this has been used on aluminum for example. Germany was affected and also China. 25% on all imported aluminum is quite some number.

But it seems as if that isn’t enough so the USA has taken more actions to bend China to comply with the american trading system. Latest penalty taxes are about to affect chinese mattresses which could have a penalty tax of 1731% (Yes, you read right, seventeen times the value of the mattress is penalty tax!). That would make mattresses from China way more expensive to customers in the USA. But also steel barrels for beer will face a 79% penalty tax. This would affect beer prices as breweries would have to pay way more for their beer barrels. And this increase would have been hended through to the customers.

As a consequence, China has reduced the export of rare metals, which are commonly used in high-tech. As the USA are importing 80% of their total demand, this is a huge impact and it could mean that certain products that rely on rare metals, will significantly become more expensive. And guess who will pay for it… – you guessd it right: The customer! AGAIN!

So are penalty taxes really bringing the economy up? We guess, not! If goods become more expensive for the customer, he is considering to wait until goods become way less expensive again. Until then, the economy will freeze. this will affect both: The USA and China!

May 31, 2019 Netspark - 1594 posts - Member since: May 9th, 2011 No Comments »

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