E-commerce may be worst hit by US tariffs, it'll be lose-lose trade war, say analysts

The Star

Analysts said e-commerce companies may be the worst hit from Washington's 10% tariff on imports from China while the 25% tariffs imposed by the US on Canadian and Mexican goods as well will result in a lose-lose trade war.  WATCH MORE: https://thestartv.com/c/news SUBSCRIBE: https://cutt.ly/TheStar LIKE: https://fb.com/TheStarOnline

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00:00I think it's fair to say that this is a lose-lose trade war.

00:28Both U.S. consumers and also Canadian and Mexican households stand to lose.

00:34The Tax Policy Center has just put out an analysis suggesting that after-tax U.S. household

00:39income could fall by 1% as a result of these tariffs.

00:43That's a cost of about $1,000 to the average U.S. household.

00:47So it's not a huge hit for American households, but it is likely to make them worse off.

00:52And then for Canada and Mexico, because the U.S. is by far their biggest trading partner,

00:57they're even more exposed to these taxes.

00:59It's going to make it harder for firms from those countries to export to the U.S.

01:04And also the retaliatory tariffs that are now going to be put in place will increase

01:08costs for consumers in those countries.

01:10I think there are kind of two major possibilities.

01:13One is what happened with the U.S.-China trade war during Trump's first term as president,

01:17which is both the U.S. and China increased tariffs.

01:21And then those tariffs have stayed there, and they are now kind of a permanent feature

01:26of the trade landscape.

01:27So one possibility is that the higher tariffs are here to stay.

01:31The more hopeful possibility will be that governments realize the costs that these tariffs

01:38may impose and try to reach a negotiated solution to remove the tariffs.

01:43So I think the Canadian and Mexican governments will be trying to talk with their U.S. counterparts

01:51and work out kind of what kind of a deal could we reach that would allow both sides to remove

01:56the tariff.

01:57When you look at the executive order that the Trump administration did, it revoked the

02:00de minimis allowance for e-commerce goods into the U.S., such as Timu and Shein.

02:07So the biggest hit will be those players, as well as Amazon, which ship a lot of those

02:11goods into the States.

02:13The players that will benefit most from this are companies that make those products domestically

02:18or other companies that may make raw materials or other intermediate inputs that go into

02:23the supply chains of the U.S.

02:24So the roadmap of tariffs moving forward is we expect that the U.S. will continue to put

02:28tariffs on most countries that they have a trade deficit with, particularly large.

02:32Think of the European Union, where the U.S. has a trade deficit with.

02:36Think of Vietnam, Thailand, these countries, Australia to some degree.

02:40And part of that is because the U.S. feels taken advantage of.

02:43They are taking our resources and our money, but not necessarily treating us in a fair way.

02:48Some of that is market access, others are just the fact of fentanyl.

02:53The U.S. is really unhappy with the fentanyl use because it's killing Americans.

02:59And so we're at the point now where the Trump administration feels emboldened to actually

03:02do something about it.

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