Do you have questions about our editorials? Questions about hot topics in the news? Each week, the editorial team responds to readers of The Press.
There is a lot of talk about inflation caused by several factors that have been brought to the fore lately. But I would like to know how much of this inflation is caused by the trade war and the numerous tariffs introduced between China and the United States under the Trump administration, among others.
Mr Glazer
Inflation is multifactorial, you are right to point that out. But there is still a major culprit: the pandemic.
It caused a chain reaction that has not finished affecting us, especially since China, with its zero COVID policy, remains at the mercy of the many confinements that put a spoke in the wheels of its production chains.
In Europe, for example, according to a survey by the European Union Chamber of Commerce unveiled last September, three quarters of companies say they are penalized by China’s intransigent health policy. The impact is therefore global and we are not the only ones in North America to be affected.
To this major obstacle was added a second one last winter. And it is the decision of another authoritarian leader who is responsible for it. We are of course talking about the Russian invasion of Ukraine.
This war is also contributing to soaring prices, starting with those of energy. It is sometimes said that the flapping of a butterfly’s wings can cause a hurricane. It is clear that a war in Ukraine can have a major impact, even on… the price of the bread you buy at the grocery store in Trois-Rivières.
Underestimating geopolitical risks is never a good idea.
But what about the tariffs imposed by Donald Trump’s administration, then?
“As the tariffs imposed by China and the United States as part of their trade dispute have been in place for a few years, they cannot be responsible for the rise in inflation over the past year,” explains Professor Patrick Leblond, from the Graduate School of Public and International Affairs at the University of Ottawa.
That said, as a general rule, the imposition of customs duties “can have a direct impact” on inflation, specifies the expert. But it all depends on the type of products affected by the tariffs put forward, of course.
In some cases, a targeted product will not change overall inflation. A tariff on wine, for example. In other cases, the impact may be more serious. “If the United States imposes customs duties on steel and aluminum, that increases costs for companies in the automotive sector, for example,” says Patrick Leblond.
These companies can choose to absorb this increase, but they can also choose to pass it on to consumers by driving up vehicle prices.
Let’s finish by pointing out that your question raises another one, which is impossible to answer for the moment: could Donald Trump impose new tariffs on Chinese products… if he is re-elected in 2024?