Your new tariff questions, answered

Jun 22, 2018

President Donald Trump drastically escalated trade tensions between the United States and China this week. On Monday, he threatened China with tariffs for $200 billion worth of Chinese goods. The news came after imposing a 25 percent tax on imports of $50 billion last week. China, along with Europe and Canada, has announced taxes on American products in retaliation. As a trade war continues looms, Marketplace host Kai Ryssdal asked listeners for their questions on Twitter and tracked down some answers.

If countries impose tariffs on US goods such as bourbon, does that mean the domestic market for bourbon could see excess supply? 

Colleen Thomas is with the Kentucky Distillers Association, whose members include international icons and small craft distilleries. She said the aging process of making bourbon makes the answer complicated. Bourbon ages anywhere from four to 12 years before it's sold. Because of this, distilleries are producing for future sales based on the growing demand. "So if that demand drops, then we will have a surplus of product here," Thomas said.

Who has the power to impose tariffs and where does the power come from?

The ultimate power player on tariffs is Congress, who delegated the decision-making to the president. Congress could take that power back.

“We have seen some moves in Congress to try to get movement in that direction,” said Mary Lovely, an economics professor at Syracuse University and fellow at the Peterson Institute for International Economics. “Because there are some folks who worry about the effect of these tariffs on U.S. businesses.”

I am a single mom. I live paycheck-to-paycheck. Is this going to affect my gas fill-ups, oil to heat my home, groceries? Or is this a durable goods thing?

While it’s possible to see increases on basic goods, it’s difficult to calculate exactly how these tariffs will filter through the economy.

“If there is an all-out trade war, then you could probably expect to see your food bill increase by between $100 and $300 a year depending on your income bracket,” said Kadee Russ, former Obama White House economist and associate professor of economics at the University of California, Davis.

What other times in history have trade tensions been this high?

“Probably the most tense time in trade history was in the lead-up to the Great Depression,” said Wendy Cutler, vice president of the Asia Society Policy Institute and a former acting deputy U.S. trade representative. While she's not saying we're in quite the same boat, she does draw a parallel when it comes to tariffs. “In 1930, Congress passed the Smoot-Hawley Tariff Act, and that put into place U.S. tariffs on tens of thousands of products and basically closed our markets,” she said.

How does the Trump administration define success in executing this trade policy?

The White House has stated its goals for imposing tariffs is to achieve lower trade deficits and end unfair trade practices.

Click here to read previous tariff questions Marketplace has answered.