At the moment, it’s a war of words with a side order of sabre-rattling. But as tensions between the US and its overseas rivals rise, the President’s crusade to make what he sees as a long-overdue ‘correction’ to the country’s trade deficit is beginning to have unintended consequences in America’s – and his own – heartland.
Since he took office, President Trump has been committed to the idea of righting the wrongs he believes have been perpetrated by trading partners looking to make gains at the expense of US interests. After dabbling with tariffs on solar panels and washing machines, a new set of curbs on steel and aluminum imports was introduced in spring of this year, swiftly followed by import duties designed to target billions of dollars’ worth of Chinese imports.
But, while China may have borne the brunt of the action, America’s traditional allies certainly haven’t escaped scot-free. Initially exempting Canada, Mexico and the EU from the steel and aluminium tariffs, Washington later confirmed that it would impose the duties across the board – special relationships notwithstanding.
While many presidential promises evaporate on entering the Oval Office, Trump has certainly proved to be a man of his word when it comes to honouring his campaign trail commitment to pursuing a more protectionist trade policy.
Within just a few days of acceding to the presidency, Trump drove a truck through the emerging Trans-Pacific Partnership (TTP) and agreed to take a fresh look at the North America Trade Agreement (NAFTA) to try to squeeze a better result for the United States. Next, hot on the heels of his announcement of the imposition of tariffs on solar panels and washing machines, a new set of curbs on steel and aluminum imports was introduced. Most recently, Trump has announced the introduction of a wider swathe of tariffs that will slap a 25% tax on an as-yet-unspecified $60 billion-worth of Chinese imports.
We’ve all heard a lot about tax reform over the last twelve months but with proposed changes still to make it through Congress, should you be planning new tax strategies now or is it best to wait till the dust settles?
This is actually a great time to review your current tax position. Our tips for getting your affairs in apple-pie order might also help to prepare the way for tax savings in the years to come.
Small businesses are the lifeblood of any economy, creating wealth and employment opportunities – and supporting economic growth at grass-roots level. This type of entrepreneurship has always been valued in the United States, where the founders of startups can aspire to become leaders of Fortune 500 companies if they hit on a successful niche.
But are small business owners being unfairly hampered by the raft of regulations introduced following the financial crisis of 2008? It’s an issue that’s hitting the headlines at the moment as President Trump reaffirms his pre-election promises to de-regulate the financial services industry.
An upturn for the economy?
After a period of sluggish performance, the US economy may be set for an unexpected upturn. The incoming Republican administration seems determined to throw all its resources into boosting the economy which, together with the much-touted trade restrictions shoring up the price of imports, is almost certain to fuel inflation above the average 2.2% of Obama’s second term.
While under Barack Obama, labour regulation and environmental legislation expanded greatly – witness the scope of Obamacare, for instance – its subsequent contraction under Trump may well encourage businesses to start investing again.
Emerging from the doldrums
The pace of US growth recovered sharply in the third quarter, peaking at its highest rate in two years and lending credence to forecasts that the country is on track for greater economic stability as 2016 draws to a close.
The economy expanded at a 2.9 percent annualised rate in the third quarter, up from 1.4 percent in the second quarter, which topped predictions of a more modest rate of 2.6 percent and reflected a spike in exports as well as an increase in federal spending, according to the US Commerce Department.
That said, consumption growth – another key indicator of the health of the economy – dropped back over the same period to just 2.1 percent, down from more than double that figure in the previous quarter, and falling a long way short of the expected 2.6 percent benchmark.