Trump’s customs and trade war: five points

Trump has introduced penalties against Mexico, Canada and China.

The EU can be next in turn.

Here is the background to the trade war – and what it means for Sweden.

1. Value promises about jobs, migration and smuggling

Some of President Donald Trump’s most important election promises were that he would arrange illegal migration, drug smuggling, and move home jobs to the United States. The penalties are a weapon that will cause Mexico and Canada to boom their vast boundaries.

Trump also complains that the United States has a trade deficit, ie buying more products than you sell abroad. Customs should protect US jobs.

Many Chinese companies have moved their production to Mexico to get around the import fees that China is already paying today.

2. The start of the trade war

On Saturday, February 1, Donald Trump wrote during the presidential order starting the trade war. For Mexico, 25 percent tax is added to all products. For Canada, 25 percent applies to everything except energy, where ten percent applies, since many companies in the northern United States are dependent on Canadian energy. China received ten percent extra duty in addition to previous import fees.

3. The counter -attack from Mexico, Canada and China

Both Canada, Mexico and China immediately responded with threats of customs walls against the United States, which means that the trade war is a fact. Canada faces 25 percent penalty tax, while Mexico talks about 5-20 percent fees on US goods. China has not specified its countermeasures.

4. The EU stands next on turn

Trump has on several occasions said that he also wants to introduce tariffs against the EU, which sells more to the United States than we buy from there. Sweden sells for almost SEK 190 billion to the US, but only buys for SEK 70 billion. Trump has set no date, but a spokesperson from the European Commission said on Sunday that the EU will “strike back vigorously” if he introduces customs for the EU.

5. So Sweden is affected by customs

The College of Commerce has calculated that Swedish exports to the United States would decrease by about 16 percent if Trump introduces customs between 10 and 20 percent, which he previously threatened. Sweden’s GDP will be marginally affected, but some industries will be affected extra much, such as the engineering and automotive industry and the medicine companies.

If the trade war escalates and becomes long -lasting, Sweden and the outside world risk stopping, and the economic recovery will be slowed down.

Sources: Commerce College, BBC, Reuters, CNN