The tariffs are real, and they are spectacularly foolish.
By Rogé Karma
www.theatlantic.com
If you were setting out to design a trade policy that would harm the American economy while undermining political support for its leadership, you might come up with something like the tariffs that Donald Trump just imposed on Canada, China, and Mexico.
The new tariffs will raise prices for American consumers, weaken the American auto industry, and prompt severe retaliation from America’s top trading partners. With respect to China, a case can be made that tariffs would promote U.S. national security and domestic industry if they were targeted and well designed. But Trump’s blanket 20 percent tariff on all Chinese imports is neither. Meanwhile, the 25 percent tariffs on Canada and Mexico are utterly incomprehensible. There is no grand economic vision, geopolitical strategy, or even political logic behind them. International trade, like all areas of public policy, is a game of weighing costs versus benefits. Trump’s tariffs are the rare policy that might turn out to represent nothing but cost.
The most widespread and direct effect of the new tariffs will come in the form of inflation. Tariffs, which are literally a tax on imported goods, are often passed on to consumers in the form of higher prices, and Mexico, Canada, and China together account for more than 40 percent of U.S. imports. Yale’s Budget Lab estimates that the new tariffs will cost the average household anywhere from $1,600 to $2,000 a year.
Those higher costs will disproportionately affect the specific items that American consumers pay the most attention to. Survey after survey has shown that discontent with the broader economy in recent years has been driven more by high grocery prices than any other category of spending. Mexico is the largest exporter to the U.S. of fruits, vegetables, alcoholic beverages, and sugar, and Canada is the top exporter of meat, grains, baked goods, and cooking oils.
In theory, American farms could ramp up production to offset some of those higher prices. But that process could take months or years, and will be made all the more difficult by Trump’s deportation agenda—nearly half of the agricultural workforce is composed of undocumented immigrants—as well as the tariffs themselves, which will raise the costs of foreign fertilizer and farming equipment, on which domestic producers rely heavily.
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By Rogé Karma
Trump’s Most Inexplicable Decision Yet
The tariffs are real, and they are spectacularly foolish.
If you were setting out to design a trade policy that would harm the American economy while undermining political support for its leadership, you might come up with something like the tariffs that Donald Trump just imposed on Canada, China, and Mexico.
The new tariffs will raise prices for American consumers, weaken the American auto industry, and prompt severe retaliation from America’s top trading partners. With respect to China, a case can be made that tariffs would promote U.S. national security and domestic industry if they were targeted and well designed. But Trump’s blanket 20 percent tariff on all Chinese imports is neither. Meanwhile, the 25 percent tariffs on Canada and Mexico are utterly incomprehensible. There is no grand economic vision, geopolitical strategy, or even political logic behind them. International trade, like all areas of public policy, is a game of weighing costs versus benefits. Trump’s tariffs are the rare policy that might turn out to represent nothing but cost.
The most widespread and direct effect of the new tariffs will come in the form of inflation. Tariffs, which are literally a tax on imported goods, are often passed on to consumers in the form of higher prices, and Mexico, Canada, and China together account for more than 40 percent of U.S. imports. Yale’s Budget Lab estimates that the new tariffs will cost the average household anywhere from $1,600 to $2,000 a year.
Those higher costs will disproportionately affect the specific items that American consumers pay the most attention to. Survey after survey has shown that discontent with the broader economy in recent years has been driven more by high grocery prices than any other category of spending. Mexico is the largest exporter to the U.S. of fruits, vegetables, alcoholic beverages, and sugar, and Canada is the top exporter of meat, grains, baked goods, and cooking oils.
In theory, American farms could ramp up production to offset some of those higher prices. But that process could take months or years, and will be made all the more difficult by Trump’s deportation agenda—nearly half of the agricultural workforce is composed of undocumented immigrants—as well as the tariffs themselves, which will raise the costs of foreign fertilizer and farming equipment, on which domestic producers rely heavily.
read the rest:
