Are President Trump’s tariffs actually benefiting the US? Despite initial criticism that they would penalise US consumers and disrupt global trade, some positive outcomes are emerging. The US has collected nearly $US50 billion in extra customs revenues due to the lack of significant retaliation from other countries. While US inflation has slightly increased, the pricing effect has been less than anticipated.
US customs duties hit a record high of $US64 billion in the second quarter, $US47 billion more than the same period last year. This ‘sweet spot’ may be temporary, as retaliatory tariffs from major trading blocs like the EU are still possible. However, Trump’s claim that tariffs would be borne by other countries might hold some truth. Global suppliers may be mitigating US price rises by reducing costs or spreading the burden across other countries, given the US remains the largest consumer market.
So far, the introduction of US tariffs hasn’t caused significant reductions in global trade. This could be due to the interconnectedness of the global trade system and the lack of retaliatory tariffs. Faced with threats of higher tariffs, trading partners are hesitant to retaliate. Even countries like Australia, which has a trade surplus with the US, may find it more logical to accept the tariffs rather than risk further penalties.
The situation remains fluid, with the August 1 deadline looming. If retaliation remains limited, US companies could benefit from engaging with global supply chains while manufacturers in the EU and Asia face high tariffs in accessing the US market. Trump’s unpredictable actions, combined with the US’s economic power, may be achieving his goal of raising revenue.
