Donald Trump’s Tariffs Are Nothing But a Giant Mistake

Bruce Klingner

Source Link

United States President Donald Trump touts his trade deals as victories against foreign countries, but it will ultimately be American businesses and consumers who pay the price. Trump’s tariffs are capricious protectionist measures ostensibly imposed to retaliate against other nations’ trade barriers, but were instead based on US trade deficits. Moreover, the US has now weaponized economic penalties to remedy non-economic issues such as immigration, drug trafficking, and election results.

The Truth About Tariffs

Despite President Trump’s repeated claims, foreign businesses and governments do not pay for tariffs on goods imported into the United States. Instead, it is the American importing firm that pays the tariff, which in turn decides to either absorb the additional cost as reduced profit or pass it along to American consumers as increased prices. So, every increased tariff imposed by the Trump administration is a tax on the American people, perhaps the most significant tax increase in history.

In addition, American firms manufacturing goods in the United States will now be paying significantly higher prices—up to 50 percent more—for some metals and components necessary for making their products. This, in turn, will raise the prices that US consumers will have to pay for American-made products. US car manufacturers are complaining that, because of Trump’s tariffs, they are now more disadvantaged against foreign competitors than before the tariffs.

Tariffs Go Against Existing “Deals” and Agreements

The US tariffs on South Korea violate the 2012 South Korea-US (KORUS) free trade agreement that the first Trump administration renegotiated in 2018, and which Trump hailed at the time as “a great deal for American and Korean workers.” Trump’s tariffs also violate the United States-Mexico-Canada Agreement (USMCA), which the first Trump administration renegotiated and he hailed as a “wonderful new trade deal” that “greatly opens markets to our farmers and manufacturers [and] reduces trade barriers to the US”