By Alex Hendricksen
When asked how tariffs work, the average American seems to be confused. The general consensus is that the exporter pays the fee, but that couldn’t be further from the truth. We’re going to break down Trump’s tariff plan to see what it’ll really mean for the U.S. economy.
What do people think tariffs are? A vast majority of Americans seem to believe that tariffs are a tax placed on goods that come from another country that the foreign company pays. While half of this is true, they are not the ones that pay the fee. We are. Now, any good that comes from another country will have an increased price because we, the consumers, are paying for it.
There are some countries that the United States already has pre-existing trade agreements with, such as Mexico and Canada, and the goods coming from these countries will likely be less impacted than other countries, such as China. China and other Asian countries have had a massive tax forced upon them. Anywhere from 50 to 97 percent is what we can expect from China, India, and South Korea.
How many times have you looked at something and the tag on the back said “Made in China”? That just goes to show how extraordinarily reliant we are on China for so many goods that we use every single day. Computer chips, clothing, steel, and more are all massive imports into the United States. So then why is Trump threatening higher tariffs on China? He believes that this will increase our production of these goods here, but at what economic cost? Goods are more than 70 percent more expensive to produce in the United States than in China, so only time will tell to see if this is a viable strategy.
What will this mean for the goods that come from these places? They’ll be more expensive. Simple as that. While the concept behind tariffs would be to increase domestic production of goods, we can already see an economy in decline. As our economy is, people are unable to afford essential things such as reliable transportation and easy access to the internet via computers. This effect will worsen as the tariffs begin to take place.
Car companies from Germany and South Korea have attempted to import as many cars as they could before the tariffs went into effect. Now every car that isn’t built in the United States will have a huge price increase. Not only is there a 10% increase for all imported goods, but there will be an additional 15% applied to that for specific goods such as cars, steel, and aluminum.
Ports around the country are empty or extremely barren. Why? We have no imports anymore. Or, rather, the imports we do have are little to none. People working at the ports and in surrounding industries will suffer because there simply will be no need to have thousands of people working an empty port.
Sadly, the Trump Administration has been vague about tariffs, and many economists are unsure what the future holds for the U.S. economy.
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