What is happening with the China Tarifs?
Recent tariffs imposed by President Trump on China have shaken the world economy. It is often taught to first year college students in level 100 Economics that in fact,“No one wins a trade war.” Tariffs are often put in place to incentivize or even punish other countries, but taxing a major trading partner can end up affecting more US industries then intended. The total two way goods and services trade with China in 2016 was $648.5 billion with imports from China costing the us $478.8 billion (Office of US Trade Representative). Now, this serves a major problem due to the amount of American factories placed in China.
The reason behind all of these tariffs can be linked back to Trump’s discontent with China throughout his campaign and presidency. He is especially upset at the fact that Chinese factories are stealing intellectual property from American companies. These products are often knock-off branded clothes, toys, and products. This in term is not beneficial for American companies who keep pride in their name brand property. However, the issue lies in the accountability of American industries. Moving factories to China and other foreign places, underpaying often impoverished people, and polluting the host country are not benefits from trade. Instead of pointing the finger so fast, Trump in turn should take a harder look at the US’s own business practices. That is not to say that China is right, it is simply stating that if our country is not to place factories in China there is less of an inclination to steal american intellectual property. Instead of placing tariffs on China the US should look internally and try to give incentives to large industries to stay within the US.
The tariffs on China especially effect Trump’s voting base, white midwestern voters. China is a major producer of agricultural machinery products that are used in America. With China promising to tax the US in response to Trump’s tariffs this could be detrimental to the American agricultural industry. Upsetting a majority of the Republican base is not beneficial with midterm elections coming up in the United States.
The reason these tariffs are not a good idea is due to the principle that everyone will be paying more. In the depression era, countries were worried about their domestic products so they placed high tariffs on most goods. This then caused an age where everyone was paying way too much for simple products. The world economy has since lowered these outrageous tariffs; however, Trump could be putting us back in an age of high tariffs. Along with potentially raising the price of everything American businesses will also lose sales (CNN money). This is due to high taxation of American companies from China having an input in the amount American companies charge. Buyers will look for other sellers instead of the going to American companies. The whole world economy could be affected if these tariffs continue.
Works Cited
http://money.cnn.com/2018/03/02/news/economy/why-no-one-wins-trade-war/index.html
https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china
https://www.theatlantic.com/international/archive/2018/04/us-china-trade-war/557573/
April 13, 2018 at 12:25 am
While I understand the desire to strengthen the domestic economy, as seems to be the main goal with these tariffs, I don’t see how the president thinks a trade war will stimulate this growth. I suppose we’ll have to see what happens, but it seems that a trade war set off by tariffs benefits nobody and leads to inefficiency and higher prices. When situations like this arise, I am left wondering whether these decisions will somehow help our nation or if they are irrational attempts to punish another country.