Modern reports indicate that the customs definitions imposed by the administration of President Donald Trump may not affect the poorest groups in American society, which increases economic pressures on low -income families, at a time when markets are witnessing increasing disturbances.
According to a report published by Bloomberg, the new trade policies, which include imposing definitions of up to 25% on the goods imported from Mexico and Canada, may lead to high prices of basic commodities on which families with limited income.
The most affected categories
According to financial analyst Molly Smith, the customs definitions imposed on consumer goods such as food, electronic devices, and clothing, more affect the limited income groups, which spend a large percentage of their income on these products. “When the import costs rise, this is reflected directly on the prices in stores, which makes the basic needs more expensive for weak groups.”
The report indicates that low -income families allocate more than 30% of their monthly income to buy imported goods, which makes any increase in prices an additional burden on them, compared to high -income families that can absorb these costs more easily.
With the continued application of definitions, financial markets witnessed sharp fluctuations, as the S & B 500 index fell to its lowest level since the beginning of the year, while the Dow Jones index fell by 1.8% last Friday.
In light of these fluctuations, economist Nick Bloom of Stanford University said: “Customs definitions lead to a high level of uncertainty in the markets, which makes companies more conservative in investment, and pushes consumers to reduce their spending, which may increase the possibility of economic recession.”
The data indicates that the inflation rate may rise by 0.5 to 0.8 percentage points in the coming months as a result of new customs taxes, which increases the burdens on American consumers, especially with the high energy and food costs.
Controversy about definitions
For his part, President Trump defended his commercial policies, and stated in an interview with Fox News: “We need these definitions to restore balance to our trade and make America great again. There are some turmoil now, but they are temporary, and we will achieve huge economic benefits in the long run.”
But opponents of Trump’s policy see that these definitions may lead to counterproductive results, as many legislators and economists who see them weighs over the middle class and poor groups, without providing actual solutions to strengthen the American economy.
In light of the continuation of these policies, economists are awaiting the next Ministry of Labor’s report to measure the impact of the labor market, as industries that depend on imported materials, such as manufacturing and retail, may be affected, which may lead to slowing employment in some sectors.
