An inhabitant of The Heard and McDonald Islands
Current U.S. President Donald J. Trump has, and continues to, make it very clear that he is not happy with the United States’ current trade deficit. A trade deficit is an economic concept in which a country imports a greater value of goods than it exports. In the U.S., that value rests around 120 billion dollars. According to president Trump this is a sign that America is weak and losing too much money to nations such as China, Japan, and the European Union. He has made it a term goal of his to resolve this issue. Beginning with a 10% tariff on all of the United States’ trade partners and following up with even heavier tariffs on certain nations, such as China, because of the immense trade surplus they have in their economic relationships to the U.S.
So, what is a tariff and who pays them? Simply, a tariff is a tax placed on imported goods and services, increasing their price. Tariffs are paid by the business or person looking to import a good, when businesses need to pay more to import necessary goods to create their products or services their costs of production go up, consumer prices follow. At the end of the line, consumers pay the price when goods are heavily tariffed, especially here in the United States where so much of our product is imported. This affects the economy of the countries who get tariffed as well, when the prices of their goods rise in certain markets, consumers in those markets stop buying. Tanking their sales.
Given Trump’s opinion on the trade deficit and his manner of trying to fix the issue, the United States has entered a trade war. Hefty tariffs have been placed on nations who were previously peaceful trade partners and markets around the world are beginning to tumble. The Dow Jones, one of the main indicators of market strength in the US, is falling at rates that haven’t been seen since the last great recession in 2008. Market researchers are definitely concerned with the current trends, but so are penguin conservationists. The Heard and Mcdonald Islands, a small Australian territory in the Antarctic sea, have been struck by a 10% tariff on all goods imported to the United States. This has raised a lot of eyebrows as the Islands are entirely uninhabited, the most significant population on the island consists of multiple species of penguin. This draws the question of: Are Trump’s tariffs overaggressive and partially misguided, or are these penguins holding the US in a deep trade deficit?