1 big thing: Tariffs on China could hit U.S. hard, too
Unless there's a breakthrough by 12:01 a.m. ET, U.S. tariffs on $200 billion in Chinese imports are set to rise from 10% to 25% — a trade war escalation that could hurt major importers and trigger retaliation by China.
- Why it matters: The result would hurt China — but could backfire on the U.S. and global economies in a way that President Trump hasn't acknowledged.
- "[E]verybody's going to be worse off," said Federico Kaune, head of emerging markets fixed income at UBS Global Asset Management. "There is no way around it. Protectionism … is bad for everybody."
Here's what Axios editors and reporters will be watching if this drags on, based on reporting by Courtenay Brown, Amy Harder, Joann Muller, Dion Rabouin, Scott Rosenberg and Felix Salmon:
Consumers: 25% tariffs will directly impact some consumer goods — baseball/softball gloves and handbags, for example.
- But the impact would be even greater if Trump followed through on the other threat he tweeted: to put tariffs on basically everything else we import from China, which would hit products that have largely remained untouched, like clothing and footwear.
- The Trump administration has mostly stayed away from putting tariffs directly on items on store shelves.
Autos: The average price of a vehicle could go up $2,750 ($3,700 for imported cars and $1,900 for domestically built cars), according to the non-profit Center for Automotive Research in Ann Arbor, Mich.
Tech: A big question is whether Trump continues to give carveouts for products like the iPhone, as he did when he began announcing tariffs last year.
Keep in mind: The economy is so interdependent that many ramifications are effectively unforeseeable:
- At first, tariff hikes will be felt by U.S. companies importing goods from China.
- Next, U.S. companies will pass increased costs on to consumers.
- Later effects might include U.S. companies relocating operations to Vietnam and other Asian countries if they think tariffs are here to stay.
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