by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Even as Trump champions a strong U.S. economy, the escalation of the tit-for-tat trade war will cause Americans even more economic pain and is not the best way to counter unfair trade practices.
Tariffs are best understood as self-imposed sanctions – literally making goods more expensive and inflicting harm on our own economy. Since many of the items that Americans purchase come from abroad, specifically China, those goods become more expensive when the U.S. charges a higher tariff. On top of that, although a tariff may protect a few jobs in targeted industries, it hurts every job that relies on products produced by those industries. Companies now have to pay more to obtain the raw materials they need. That is all bad news for economic growth.
Adding to existing tariffs, which are already hurting U.S. producers and consumers in industries ranging from brewers, to agriculture, to textiles, and many others, isn’t going to help anyone.
In fact, Trump knows this. That’s why he created a plan to give a bailout to the tune of $12 billion to farmers adversely impacted by the trade war. That means that the U.S. is spending tax payer dollars to fix a problem it created.
The real kicker though is that tariffs, although they might hurt the Chinese economy, probably aren’t going to persuade Beijing to change its practices and will thus result in a stalemate where people on both sides of the Pacific are worse off.