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Trump’s trade war on Christmas

Your new holiday lights probably got hit with tariffs.

26 November 2018, Lower Saxony, Wedemark / Ot Hellendorf: Decorated for Christmas with illuminated figures and chains of lights is a property and house in Hellendorf north of the capital of Lower Saxony. The luminous objects consume around 3000 kilowatts
Christmas decorations in Hellendorf, Germany.
Holger Hollemann/Picture Alliance/Getty Images

President Donald Trump’s trade war with China has a new casualty: Christmas.

Specifically, Christmas lights.

Trump’s $200 billion in tariffs on imported Chinese products include new taxes on nearly all holiday lights sold in the United States, according to Americans for Free Trade, an advocacy group campaigning against the tariffs.

The vast majority of those little lights that many Americans string across their homes and Christmas trees during the holidays — about 85 percent — come from China. In September, the administration added a 10 percent tariff on holiday lights made in China, making them more expensive for stores like Target and Walmart to buy.

Which means Christmas shoppers might end up paying more for them, too.

In January, a whopping 25 percent tariff goes into effect on top of the 10 percent tariff. Meaning next Christmas will be even more expensive if Trump is still waging his trade war.

Holiday lights are among dozens of Chinese goods Trump has hit with tariffs this year, a move intended to punish China for unfair trade practices. But the strategy is backfiring.

Trump’s tariffs on Chinese imports hurt American businesses

Over the past year, the US has placed about $200 billion in tariffs on Chinese goods, in part to make Chinese products more expensive so Americans don’t buy them (and, ideally, buy American-made products instead). The administration has also placed steep tariffs on all imported steel, angering other major US trade partners.

The idea was to level out the trade deficit and make China buy more US goods; but, as expected, China responded by placing its own tariffs on American imports. And Trump’s tariffs on all imported steel and aluminum, which went into effect in March, have led other US trading partners to add their own retaliatory duties on American goods, including dairy, pork, apples, and potatoes.

The trade spat has hurt American farmers more than anyone else. Prices for agricultural products like soybeans have dropped to a 10-year low since Trump imposed the sweeping tariffs on Chinese goods. And farmers across different markets have grown increasingly nervous about how their businesses will fare if the trade war continues.

That’s when Trump proposed the idea of a government program to stabilize the agriculture industry in three ways: by giving farmers direct cash assistance, buying surplus crops and giving them to food banks, and a vague trade promotion program.

The stabilization package uses a Depression-era program that allows the government to borrow up to $30 billion from the Treasury without congressional approval, according to the Washington Post. In September, the Agriculture Department sent farmers $25.8 million in aid. But even if the bailout does keep some farms open, it doesn’t address the fact that Trump’s trade policies just aren’t working.

The trade war hasn’t reduced the trade deficit with China

Trump has repeatedly stated that most of his trade policies are meant to target China, which sells more goods to the United States than it buys from the country.

But as Vox’s Alex Ward points out, the US has a lot more to be angry about than just the trade imbalance:

Among other indiscretions, Beijing has stolen US technological and personnel secrets for its own advantage, antagonized US allies in the South China Sea, killed or imprisoned more than a dozen American informants, and taken millions of US jobs over the past 15 years.

Trump’s strategy has focused on efforts to cripple the Chinese economy at all costs, while largely disregarding the impact on the US economy. That includes placing tariffs on more than $200 billion worth of Chinese goods in the past year, which makes Chinese products more expensive — and therefore less appealing — to American consumers and businesses.

But Beijing has responded with its own tariffs on American goods, and the country has stopped buying as much from US manufacturers. So the trade imbalance between both countries is now worse.

In September, America’s trade deficit with China reached a new high: $34.1 billion. That’s a 13 percent increase compared to last year. Ford, America’s second-largest car company, said in August that Trump’s tariffs cost the company $1 billion, and the company now expects massive layoffs. On Monday, GM made a similar announcement.

Trump is expected to meet with Chinese President Xi Jinping this week in Argentina for the G20 summit, and everyone is hoping they will stop fighting and finally be able to come to some sort of agreement. But experts aren’t optimistic.

Which means that Trump’s trade war is likely to continue for the foreseeable future. And Christmas lights will remain stuck in the geopolitical battle.