Opinion: A trade war looms on

Taylor Whitaker - Staff Writer

Donald Trump has been president for less than a month ran a campaign centered around the promise to prioritize American interests, one of those being renegotiating trade agreements to keep companies producing in America as opposed to foreign nations.

Soon after his inauguration, Trump signed an executive order to impose stiff tariffs on China, Canada, and Mexico’s exports. To clarify, tariffs are taxes on goods that are traded between nations and have the potential to incentivize companies to produce domestically to save themselves money. Political Science Professor and Consultant Robin Johnson said, “most economists say tariffs are bad, but Trump is trying to address some countries, such as China, that have been cheating on the established rules since their entry into the World Trade Organization. His tariff threats may be just an opening for further bargaining, but I think he is sincere in wanting more goods made in the US.”

While this ideology doesn’t seem too apprehensible, many people are unaware that these imposed tariffs would be paid for by American companies importing goods. For reference, President Trump is proposing a combined 25% tariff on Mexico and Canada, and an additional 10% tariff on goods from China. Every time an American company wants to buy products made in China to then sell to American consumers, these American companies will pay a 25% tax just to bring those goods into the country. On the American market, these companies will have to offset the tariff costs, driving up prices for the product.

American citizens voted for Trump under the impression daily living costs would decrease when he took office. If the tariff threats are seen through, inflation could worsen and the cost of everyday goods like gasoline, groceries, housing, etc. will rise. “Trump's team hopes is that his other policies (Tax cuts, deregulation) can counteract tariffs and keep the economy growing and inflation under control," Professor Johnson said.

Political Science Professor Mike Nelson said: “There seems to be a long-term goal, especially done with state support, new industries could be created. We aren't seeing any clear signs of a plan that would achieve those objectives. The other piece of this is that this targeting of allies is one of many different policy moves that is eroding trust in America and could affect us in many ways down the road.” Whether President Trump's plan to implement tariffs has any legitimacy is unknown, but Professor Nelson isn’t the only person who feels this way.

Economics Professor Richard Johnson said, “We are never going to make the necessary cuts in government spending that would allow us to fund our government solely through tariff revenue. Trump is grossly mistaken when he thinks he can protect our country through tariffs.” He continues to say, “Tariffs benefit those who are protected from competition, which will now be those companies in the U.S. that can now charge higher prices because they don't face the competition that they used to face from imports.”

History has shown that tariffs don’t bode well for the American economy, as seen from the results of the Smoot-Hawley Tariff Act. The U.S. put tariffs on essentially all American imports, and countries retaliated, placing tariffs on American exports. The act made everyone involved worse off. “We should learn from that logic and history of what has happened before,” said Professor Johnson.

In theory, it would be great to have products produced in America more so we could rely less on foreign goods, but we have to remember it’s the consumers who pay the real price for implemented tariffs. It doesn’t seem like there is a clear plan of action and whether these tariffs would have a great enough impact to greatly affect American consumers is currently unknown.

We are in a time of great political uncertainty. New information surges daily and it’s wise to keep yourself informed as this issue further progresses.