MOSCOW, February 4. /TASS/. The United States is dead set on starting a trade war, while any recent suspension of tariffs is merely an invitation to negotiate, Alexey Bobrovsky, director of the Institute for the Study of World Markets, told TASS.
On February 1, US President Donald Trump signed an executive order instituting tariffs on goods from Canada, China and Mexico. According to the document, imports from Mexico and Canada are subject to 25% duties. Trump later suspended their introduction for a month.
"The Trump camp is united in its belief that the new US policy should involve a trade war. They set a goal to balance the budget and they will try to achieve this, at least partially, by increasing revenues from duties. Of course, the ideal solution would be to reduce domestic spending on the military and social benefits, but this seems unlikely given the vested interests inside the US. But it is possible to threaten other countries with duties," Bobrovsky told TASS.
The expert suggested that the US could institute a 2.5% tax that applied to all nations, instead of levying higher ones on specific countries.
"The US Treasury once floated the idea of 7.5% tax across the board, but most likely, duties of around 10% will be introduced on some groups of goods for countries with the highest trade imbalances with the US," the expert says.
"As for prices in America - theoretically, at the very beginning, prices may rise. But we should consider that the Americans have alternative suppliers. For example, South America. In the short term - and Trump’s administration admits this - a surge in prices is possible, but only in the short term," Bobrovsky posits.
"Firstly, South America is ready to take over the fallen banner of Mexico and Canada. Secondly, both the Mexicans and Canadians will be forced to reduce their margins and, accordingly, reduce selling prices to compensate for the duties, since they do not want to lose a huge sales market like the United States. Well, and thirdly, the duties will still be lower," the expert explains.
In his opinion, given Trump’s background in business, he is using the duties as a negotiating chip.
"He will bargain. The 30-day pause in relation to Mexico and Canada speaks precisely to this," the expert concludes.