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A little less than thirty years ago, the cold war ended, in which Russia was the main enemy of the United States. UU Now, from the mouth of President Trump himself, it turns out that Putin, the president of Russia, is his least problem. Indeed, it has put its main allies against, not to mention its rival, China, but it is now possible that the American exporters themselves, who are supposed to be the beneficiaries of their trade war, and most importantly, the consumers those who finally decide on votes. If he does not back down in his trade war, and does not dismiss him as he did with North Korea, it could be that his reelection is seriously threatened and he would be, with Carter , one of the few presidents of the United States. UU it does not succeed.
This has been widely covered by the press, with studies and recommendations from all economists, but it seems that bullets do not come in.
The Effects of Protectionism
It turns out that the products are not entirely manufactured by one country, but, for the sake of efficiency, the parts are made in different nations, where each has its comparative advantages. So, for example, the iPhone, which is ultimately manufactured in China, is registered as an import (Trump's problem), to which Apple adds its final margin, then sells it everywhere. But China only acts as an badembler. The cell phone contains coins from South Korea, Japan, Taiwan and … the same United States! Ironically, China's share in the final cost is less than 5%, so that by applying tariffs, importing parts to the same Apple, which is supposed to be the beneficiary, becomes more expensive . And since China now has to pay taxes to enter the US UU., What is willing to pay their suppliers is less, so it hurts Japan, Korea and Taiwan, strategic partners at all levels. As the iPhone will be more expensive, it increases the cost of living for all consumers in the world, starting with the same United States, which must elect the president in a few years. Their sales will fall, and especially abroad, who will opt for Korean or Chinese cell phones. If the new price of the iphone was dropped by Apple before protection, there is no way that the new situation can benefit, considering that the collected tariff goes to the government and not to Apple, so it does not get the highest price paid by Apple. the rest of the world.
The future for Trump nothing flattering
If cars are added to the iPhone and all products that make up the basket of US consumers. UU and we think about the amount of margins that are discussed, tariffs of 25% and more, we understand that the American citizen does not oppose it, which enjoys its standard of living to the extent that the products that it is it consumes were I was falling in time, thanks to the same globalization
. What is happening is that at least on paper, Trump is trying to go back 100 years in history, to put the country in the process of producing things as before. But the cost of this step is immeasurable, because that is why progress has been made. If it's not just a bravado on his part, which is already outdated, the trade war will not last long and Trump will benefit from fishing.
Enrique Goldfarb
Economist
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