Tarrifs....a good thing or not?
Tariffs that the current administration are imposing or considering, American companies are reacting and in some cases altering plans in production, expansion, capital, etc. We can debate the validity of these tariffs and resulting trade wars but the real story is in how it ultimately affects our American jobs, companies and foreign investment. Here is one example that hits home and involves both my brother the plant manager and a cousin, a machine operator. My brother has been intricately involved with this expansion which has now been halted due to the anticipation of tariffs. Then research any other examples of tariff fallout's or positive results. Some are predicting that all of the positive economic gains in the past couple of years will be nullified by tariffs and trade wars and may push the US economy into a recession.
- A.J.Lv 74 months agoFavorite Answer
It depends upon surrounding circumstances. In general, they are a bad thing because they act as a tax on consumers. The importer pays the tax and must pass it through in higher prices. Since the Middle class does most of the consumption, it is a tax on the middle class. There can be benefits to domestic producers of the items, but if those producers are not passing through most of the revenue to employees, the benefit is to the wealthy upper class. There may be no benefit at all if there are no domestic producers almost competitive. If the tariff is not on all import of an item and instead is country specific, it just changes the origin to a different foreign producer at a higher consumer price tag.
In the current China tariffs, they are awful. There are no competitive domestic producers and no skills or investment to create them and inefficient transport of sub-commodities. American expansion is only in certain steel and aluminum and did not create jobs or require capital purchases. Production is mostly automated and Donald Trump was educated on obsolete information and listened only to support opinions ignoring all dissent.
If you make a claim of expansion, state the specific companies and jobs created by it. Meanwhile, counter tarrifs crush the exporters and in this case also damage relationships and has a secondary effect not as visible which is damage to American branding in China, a market of over a billion consumers. US Companies with China retail should see sales declines in China if my understanding of the people is correct. I worked directly with people in China and visited several times. This cannot be good and damage is almost unrecoverable.
There has been a shortage of semi-skilled labor in the USA for years. Machine operators have open jobs with or without China tariffs.
The recession has started. That is why the FED is lowering interest rates, but that also is ineffective based on obsolete concepts. Lower interest rates are bad for banks and only good for the economy if businesses and consumers borrow more. But, the businesses are mostly cash rich already and consumers debt laden now. The only advantage is if the Federal government in borrowing more and refinancing debt gets the lower rates in bond sales. Our $23 trillion in debt can't be ignored and is the actual beneficiary. But, a crashing economy is bad for tax income to the government, more than outweighing the new debt interest affect.
Bottom line in simple. If tariffs can create more jobs, and get those jobs filled, they can be good.
People are unskilled for the jobs, and don't want to move to where they are, and can't move if they wanted to because of cost to move and other factors, and since automation is most efficient, few jobs are actually created.
This tariff rhetoric from Trump is just that - rhetoric. The coal jobs he swore he is protecting are going away. The automotive jobs he shouts about are also dissappearing. Trump only knows how to give commands. No action behind it that fixes it.
And, the gains of the past since 1979 have gone to the upper 20% of wealthy.
Minimum wage should be $10.25 based on January 1980 and consumer price index, but housing and education costs rose much faster. Bottom 20% have fallen way behind. Next 20% fallen behind. Second tier from the top just barely beat inflation. Top 20% has all economic real gains since 1979, with just a few exceptions of those moving up. 2/3 of the country has been hurting as indentured servitude with no hope of ever retiring and unable to buy a home.
- OiyLv 54 months ago
There are tariff and nontariff barriers in economics. They are simultaneous too. if you believe in the partial static analysis, the tariff will protect domestic producers, encourage jobs, and increase the government's wallet. The argument is it overrule the comparative advantage. Tariff measure will cause a win situation for a country, and the rest is the looser. However, free trade will create a win-win situation for all. You decide.
- KaleyKLv 74 months ago
In 1913 federal income tax was inaugurated . How did we have a government before income tax??? The answer is ... tariffs. Tariffs are a common form of financing government. Tariffs are a "good" thing. You're correct though, the real story is how it affects America ... in the LONG RUN. The tariff war with China is hurting China far more than the US. But the Chinese people do not have freedom of speech so they cannot complain about it, And they are used to suffering. The government of China is betting they can outlast America. Can they???
- jimanddottaylorLv 74 months ago
A tariff is just a tax imposed on imported goods. It takes money from the consumer and gives it to the government. If you remember back some 250 years ago there was a tax on the importation of tea. The consumers got pretty upset by that.