While the Wild Customs policy of US President Donald Trump drives people on their foreheads worldwide, the World Trade Organization (WTO) has wondered: are they really, as the Republican advertised, they have to bring the desired effect with them?
The fear of a global economic crisis agreements calculate experts that would be enormous burdens in the house, many jobs are at risk. In short, rates can favor the domestic branches of the industry that compete with the imported goods, explains Ralph Ossa in a WTO blog contribution. However, this reduces employees and capital from the export sector.
The expansion of domestic industrial branches also drives up wages. This in turn increases the costs for exporting companies, which are then less competitive in international markets. “In short, rates are very simple: they increase the domestic price for imported goods,” Ossa analyzes. This has consequences for prices, wages, exchange rates and trade flows. The economist does not call the US, who want to heat domestic production with lush rates.
Hardly any influence on the weights of the trade weight
Ossa also describes a currency effect: rates reduced the domestic demand for the product documented with customs. The lesser need for foreign currency and leads to an upgrade of the domestic currency. Customs could change the trade in individual sectors or bilaterally, in general they would have had little influence on the aggregated trade weights, according to Ossa.
The long -term consequences can have it all
His conclusion: “Customs are not only an instrument for increasing income or protecting domestic industry -they are a political lever with many reaching and often unintended consequences. Their trekking for short term can disguise long -term costs in connection with inflation, competitive capacity and international cooperation.”
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
