President Elect Trump has expressed that a goal of his upcoming presidency is to increase goods being produced on American soil, by decreasing imported goods through tariffs.
Tariffs are an imposed tax on goods and services imported into a country from an outside country.
It seems that President Elect Trump’s goal in imposing tariffs on imported goods is to cause companies to start producing their goods in America rather than in other countries. However Companies would likely increase their product costs for the consumer to absorb the tariff costs.
According to Dr. David Campbell, an economics professor at Milligan University, there isn’t a way to combat the increased cost of living that tariffs would cause, because costs are all based on resource costs. This would cause a shift in consumption that wouldn’t necessarily have happened if there were no tariffs.
Tariffs would likely only benefit a small portion of the American population, those who would be hired by the few factories that would be established in America, while the overall cost of living for the average American would go up by roughly $2,000 each year.
Internationally, the imposed tariffs could harm the economies of the countries that rely on trading/exporting goods into America. An example of this would be with many African countries that rely on American trade, tariffs against them could cause them to move towards trade with other countries like China or Russia, who will end up being cheaper to trade with.
“Say we put a tariff on China, their response is not going to be to say ‘thank you sir, may I have another’,” said Dr. Campbell, “they’re going to respond with tariffs or quotas, or import protection of their own.”
Also, Tariffs on America’s allies could seriously alienate our relationships with them, especially most European countries, along with our Neighboring allies, Mexico and Canada. With many of these countries being economic trade partners, imposing tariffs could be incredibly harmful from an economic standpoint along with from a political standpoint.
From an economic point of view, it would be smarter or more beneficial to let the Free Market system do its own thing, unless it proves that Government intervention is necessary.
“What I would recommend instead of the sort of wild-cat ten percent on everything, twenty percent on everything,” Said Dr. Campbell, “let’s make the World Trade Organization a thing again, and if a country is competing illegally, lets have some specific tariffs on what they’re doing.”
About The Author
Aaron Walker is a Junior at Milligan University. He is an English major with a minor in professional writing, and a member of Milligan’s Disc Golf team. He enjoys medieval fantasy novels, rock music, disc golf, spending time with family, and coffee.