United States President Donald Trump believes it will be easy for the U.S. to win its trade war with China.
China exports approximately $500 billion worth of goods to the U.S., while the U.S. only exports around $150 billion to China. So, among other things, President Trump is betting China will run out of retaliatory tariffs to slap on U.S.-produced products, meaning his strategy of slapping tariffs on goods made in China and other countries is an easy way to boost the American economy.
If only winning a trade war were that easy.
Work + Money reached out to economists and asked them to explain tariffs, the current trade war and what we should expect moving forward.
"Tariffs typically harm consumers in the short run as they are forced to pay higher prices than they would otherwise pay," said John Linton of Elbert Capital Management. “Tariffs typically harm the macro-economy in the long run as domestic companies become less competitive in international markets as they enjoy their pricing protection at home."
Before we dig into the details, though, let’s establish the basics.