The trade war that was initiated by the Trump administration continues, even three years later, to harm the U.S. economy greatly. It makes it difficult to maintain positive relationships with our trading partners globally. For more than a year now, U.S. tariffs have been crushing American businesses. In response, businesses are pulling back on both hiring and wage increases, contributing to an ever-deepening economic twilight zone. In fact, the dollar has lost almost 99 percent of its value. This decline will further exacerbate the fiscal crisis all sectors are facing.
In just the past 3 months, U.S. wholesale prices jumped 0.9%, illustrating the overall effects of tariffs on consumer prices. In a troubling turn of events, the United States has retaliated by placing a 25% tariff on Indian exports. In fact, this tariff might even double again in less than three months. This tariff will have a large impact on U.S. smartphones produced in India, illustrating the highly complex and intertwined nature of global supply chains.
Scottish exporters are under the pump. On top of these challenges, the recently imposed 10% tariff on Scottish salmon has further intensified competition for these producers in the U.S. marketplace. At the same time, their Norwegian competition has even higher hurdles to jump, facing a massive 15% tariff. Scottish Gourmet USA is doing their part by increasing the price on its Scottish imports. This of course includes their iconic shortbread, which holds the number two rank as America’s favorite cookie behind chocolate chip.
The challenges are not limited to Scotland. We have become accustomed to seeing the U.S. auto industry suffer massive losses as most vehicles built in the U.S. have parts made in different countries bordering our own. Furthermore, Canada likely is experiencing the largest bite because of its tightly intertwined economy with the US.
Other sectors, such as U.S. commercial bakeries producing Lorna Doone Shortbread cookies, could see job creation spurred. Overall, business owners continue to report a deep sense of gloominess. Anne Robinson, President of Scottish Gourmet USA, outlined the negative impact these tariffs are having on their business operations.
“We are holding off hiring, raising wages for deserving employees, possible expansion of our warehouse space and many other possible purchases that could help our business grow because of the tariffs and resulting fall in the value of the dollar.” – Anne Robinson
Robinson further stressed that tariffs are just another tax increase with no positive return to anybody in the chain. She noted the stark reality facing producers:
“When we should be thriving, instead we are struggling.” – Anne Robinson
While businesses are facing unprecedented cost increases, consumers will have to soon as well. Robinson expressed her concern as to whether repeat customers will keep buying their favorite products when they are faced with higher costs.
“My fingers are crossed in the hopes that our loyal customers will continue to buy their favourite cookies, candy, jam or haggis.” – Anne Robinson
The unprecedented tariff climate is pushing the producing countries to come up with new export strategies. They are currently targeting Europe and Southeast Asia – viewing both areas as potential ‘safe havens’ for their supply. This change is indicative of larger ongoing trends in international trade as nations scramble to re-establish value lost due to U.S. tariffs.
Philip Scrase, an industry analyst, pointed out that while tariffs are intended to protect domestic producers, they often have unintended consequences:
“The move may hurt US seafood processors and consumers more than it helps domestic producers, particularly in the retail sector, where price sensitivity is high, and substitutes are limited.” – Philip Scrase
Businesses of all types and industries are being hit hard by soaring cost of doing business. Because of this, the larger economic impact is unclear as they balance their choices. Escalating dealer costs are forcing Amtrak and too many other businesses into a corner. On top of that, the prospect of even more tariff increases hangs in the air.
As the trade war continues, its damage grows more acute. As the tariffs continue to reverberate beyond their original intent, they are radically reshaping the economic landscape and changing the dynamics between American consumers and foreign producers. Scottish produce represents the depth of Scottish participation in today’s interconnected global trade. We only need to consider how a shift in federal policy can quickly send shockwaves through economies across the globe.