As the year winds down, now would be a good time to examine the new tariffs imposed by the United States in 2018. Whether your company is located in the States, somewhere else in North America, or overseas, these tariffs have undoubtedly affected your business – and will continue to do so well into 2019 and beyond. These new tariffs – colloquially known as the ‘Trump Tariffs’ – are controversial, but whether for or against them, anyone with a toe in international business should understand and be ready to navigate them.
Discussed nightly on the news and all over the internet, international tax tariffs are getting more attention from the public than they have in decades, perhaps ever. Of late, they have become something of a soft, economical ‘weapon.’ Early in the year, the United States imposed tariffs on solar panels and washing machines, promptly following those up with further tariffs on steel and aluminum. Trump’s government, in a series of exceedingly bold moves, targeted these tariffs on a number of the States’ allies and favorite trading partners, such as Europe, Mexico, and Canada. Some of those countries promptly responded with retaliatory tariffs of their own on against the United States. Canada, for example, matched the Trump tariffs one-to-one. This has resulted in Trump threatening to impose further tariffs on the Canadian auto industry should the two countries not be able to find a middle ground. Some experts believe this has done irrevocable damage to one of the world’s closest-knit international relationships.
But no international relationship has been more strained by these new tariffs than the one between the United States and China. In March 2018, Trump had the United States Trade Representative apply a tariff against Chinese goods of more than 50 billion dollars; the reason given being China’s supposed theft of US intellectual property, which has been a longstanding point of controversy in relations between the two countries. Already contentious international trade partners, this has, according to many economists, started an international trade war between the two global superpowers.
While Trump’s government has insisted that these moves were made in order to improve the United States’ economy in the long term, many, including the Chinese government, have accused Trump of stoking the embers of international controversy and attempting to handicap existing trade relations with the goal of propping up the American economy in the short term. Furthermore, Trump has vowed to renegotiate the States’ involvement in the North American Free Trade Agreement and the Trans-Pacific Partnership. With more and more tariffs and developments being announced each week, many companies are turning to international sales lawyers or hiring an Importer of records to keep their business in order. These turbulent changes mean that the international economic landscape is shifting constantly.
It is understandable if these tariffs seem confusing to the average accounting department; they seem to leave even the most storied economists baffled. And, like just about every move the president seems to make, these trade tariffs excite constant attention and controversy. Expect that to continue deep into 2019 and likely beyond.