America faces 'counterattack' from tough tax policy

President Donald Trump applies tough tax policies to many partners.

A study by the US Federal Reserve, conducted by two economists, Aaron Flaaen and Justin Pierce, shows that the change in tax policy that the US started applying since 2018 is related to the unemployment rate and price index. The total amount of taxes that US consumers and businesses have to pay in a month reached a record high in September 2019 of 7.1 billion USD.

According to this study, although the US tax policy has indeed reduced the competitive pressure from imports on some US manufacturing industries, this advantage has been significantly reduced due to increased input costs as well as retaliatory tariffs applied to output products. The US's increase in tariffs on imports into the US has led to many countries imposing retaliatory tariffs, which is the reason why costs in 10 key industrial manufacturing industries have been pushed up, including: magnetic and optical equipment, leather products, aluminum, iron and steel, motor vehicles, household appliances, saws, audio and visual equipment, pesticides, and computers.

The prices of many US-made products have been pushed up due to increased input costs. Photo: Financial Times

In addition to the measurable impact in specific numbers, the study also said that President Donald Trump's tax policies also reduced investment flows into manufacturing sectors due to businesses' concerns about the instability in the government's international trade policies.

In March 2018, the Trump administration first imposed tariffs on imported steel and aluminum, claiming that unfair trade practices had caused an attack on the US steel and aluminum industries. Since then, Trump has imposed numerous other tariffs, particularly on imports from China, worth tens of billions of dollars. China has also retaliated against US imports, albeit with more restraint.

Diep Khanh