In response to global tariffs on steel and aluminum set by the Trump Administration in June this year, tariffs on €2.8bn worth of American products such as bourbon whiskey and orange juice have finally been administered by the European Union (EU). In a tweet sent out on Friday, US President Donald Trump threatened to retaliate in the form of imposing further tariffs on all imported EU cars in the US. The announcement on Twitter also saw the plummeting of the European Auto Stock Index, along with the fall of stock prices for US car manufacturers such as General Motors and Ford.
Is tariff-tweeting even legal?
Well, sort of. Under US law, the determination of tariffs and taxes falls under the purview of Congress. However, the executive has the ability to impose tariffs on foreign countries on the grounds of ‘preserving national security’. It just so happens that the real demons that the US is currently facing (at least according to the Trump administration), are the trade practices of foreign countries.
The extent of the impacts on US consumers is currently being debated amongst economists. However, US-based companies that are affected directly by the EU tariffs (such as Tennessee’s distilled spirits industry) will likely see a decrease in revenue from European markets. This may also have an immediate effect on the political leanings of the historically ‘red’ states that are affected. Another such example being Florida, a key producer of Orange Juice and a notable ‘swing’ state in the region.
(Featured photo taken from BSIC)