Jun 3, 2018

The big picture: American products that now face Trump's trade war

Illustration: Sarah Grillo/Axios

China, Canada, Mexico, and the EU are responding to Trump’s trade war against each of them with their own retaliatory tariffs — or threats of them — against products from bourbon whiskey to cheese to chocolate.

Why these products are targeted: As Mexico’s Secretary of Economy Ildefonso Guajardo told Mexican media earlier this week, it’s about targeting districts whose lawmakers may get angry calls from constituents and companies in their states, and who then may try to get a hold of Trump's ear to influence how he moves forward.

“These are products that have political implications in districts, where important house members and senators have been raising concerns to President Trump about how he is managing these decisions. At the end of the day, the effect of this will fall over voters that live in districts that have a voice and a vote in the U.S. Congress.”
— Sec. Guajardo
  • For example: The dairy industry in Wisconsin, which House Speaker Paul Ryan represents, might explain cheese and yogurt's presence on the list. Kentucky, which Senate Majority Leader Mitch McConnell represents, might explain the bourbon. And Trump is not bound to want to upset Pennsylvania voters who were key to his 2016 victory, which may explain the chocolate.

What's happened:

  • These threats of retaliatory tariffs come in light of the fact that Trump had exempted Canada, Mexico, and the EU until this Friday from tariffs on imports of steel and aluminum. (Here’s what happened this week in the trade war.)
  • The Trump administration announced tariffs on Chinese goods in March, and more in April, and China announced tariffs in response each time worth tens of billions of dollars.

The list of products:

  • China: Fruit, nuts, wine, pork, aircraft, automobiles (since been cut), soybeans, sorghum (since been cut), corn, cotton, wheat, forms of beef, cranberries, orange juice, whiskey, tobacco, liquid propane, some polyester, plastic products, chemicals, and forms of aluminum and steel. Fortune has a list of 106 products hit.
  • Canada: Cheese, pizza, quiche, chocolate, whiskies, toilet paper, paper towels, strawberry jam, ketchup, mustard, yogurt, lawn mowers, refrigerators, washing machines, maple syrup, beer kegs, mineral water, fresh orange juice, mayonnaise, salad dressing, automatic dishwasher detergents, cucumbers, gherkins, ball point pens, felt-tipped pens, plywood, bobbins, roasted coffee, licorice candy, toffee, hair spray, shaving creams, soaps, candles, kitchenware, manicure and pedicure preparations, handkerchiefs, facial tissues, printed postcards, some insecticides, iron products, sailboats, some chairs, mattresses, plastic bags, sleeping bags, playing cards, soy sauce, and forms of aluminum and steel.
  • Mexico: Lamps, pork, cheese, flat steel, apples, pears, grapes, cheese, blueberries, sausages, and other meat products.
  • EU: Bourbon whiskey, motorcycles, denim, cigarette, cranberry juice, orange juice, some pants and shorts, some bedlinen, corn, tobacco, t-shirts, motor boats, some rice, some beans, peanut butter, and forms of aluminum and steel.

What to watch: Some of these retaliatory measures have a comment period, like in Canada, and could still be tweaked before becoming finalized. The retaliatory measures from the EU could take years to be implemented. Plus, Trump has left the door open to future negotiations, so the entire premise of the tariffs and the retaliation may fall apart in the end after all, adding an amount of uncertainty to the entire situation.

Impact, for now: Consumers are likely to pay more for a chunk of goods, but it’s not just individuals that will feel the burn. Companies are likely going to grapple with a cascade of effects beyond just rising prices — including potential layoffs and sliced paychecks, too.

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