President Donald Trump was the one who escalated those already hot trade tensions Wednesday morning. Instead, he slapped a new round of tariffs that affects imports from dozens of countries across the world. One of the countries hit is Lesotho, which currently suffers the highest single-nation tariff rate in the world at an incredible 50%. Shipping costs for American firms exporting goods overseas have more than tripled. This change adds a previously imposed 20% duty in addition to a new 34% tariff.
The new tariff structure has imposed a heavy cost on Lesotho. This country has a great deal at stake on their exports to the U.S. market. President Trump’s last-minute surprise 50% increase raised concerns even in the trade experts and economists. They are most worried about possible repercussions on Lesotho’s economy.
China is looking down the barrel of historic penalties as China’s exports to the U.S. are currently subject to an average tariff rate of 104%. This figure includes a 26% tariff on imports of this product, turning Taiwan’s tariff rate into the second-highest single-nation tariff rate according to the most recent measures. Cambodia dangerously follows behind Lesotho, as its exports to the U.S. have recently been hit with 49% tariffs. Laos and Vietnam are next, with tariffs currently at 48% and 46%, respectively.
The signing of these tariffs into law represents a new chapter in U.S. trade policy, one that favors protecting booming American industries. President Trump has been uncharacteristically confident in this strategy, claiming on the campaign trail that,
“America is going to be very rich again very soon.” – Donald Trump
By implementing these tariffs, the administration’s goal has been to prosecute a strategy that increases its domestic production prosperity while reducing the national trade deficit. Critics have raised the alarm that these above measures would draw retaliation from the countries they target. Such counterproductive response perhaps would only produce greater costs to American consumers.
This new round of tariffs doesn’t stop there. It hurts Lesotho and China. It also applies to products imported from 74 other countries. Trade analysts suggest that while the intent may be to bolster U.S. manufacturing, the potential consequences could lead to increased tensions in international trade relations.
Our own global markets are responding to these changes. Stakeholders of all interface, international, and domestic economies are focusedly watching to see what the long-term impacts will be. The landscape is still developing, and more changes to trade policies can be expected as talks and negotiations are ongoing.
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