Tariffs are government taxes on imported products, meaning, consumers are paying a higher rate for the product of their choice.
In coming out against tariffs, I’m not defending other countries stiffing their own consumers and US exporters, but lets be clear, tariffs are a major government tax on the consumer wherever he or she resides. Whatever the tariff a country has on products, the more open the US economy is to foreign products IN SPITE of their tariffs, the better for the US economy. Lets say Japan is dumping cars in America, so what, what happen within the US economy as a net result of consumer purchases, (+ plants being built to accommodate consumption) is better for America. The situation is much more complex than any zero sum game.
What an automaker might lose in profit, is greatly outweighed by economic activity as a result of purchasing power due to cheaper goods. Yes, leverage is good, but overall, tariffs are a bad policy. The US could swallow any offsets in US profits by purchase power of the consumer and resulting economic activity directly related to import traffic. I agree somewhat that saber rattling is good, foreign states have been guilty of egregious tariffs…so too the US, with over 15 000 of them still on the books.
Remember one thing when mulling over tariffs and trade deficits, the economy is immensely complicated, what needs to be looked at closely are net gains across the board, not individual industries per se. It sucks to see one’s own industry suffer due to egregious, unfair trade practices in another country. We can try to place pressure, and that’s a good thing. What we need to refrain from however is the knee-jerk ”quick fix” mentality of applying tariffs that result in self defeating trade wars which in the end undermine the economy even more.
President Trump Gets Tough on EU After Juncker Threatens Taxes on Jeans, Bourbon, and Harley-Davidsons
U.S. President Donald Trump is getting tough on the European Union, after the bloc’s unelected leaders threatened to levy punitive tariffs on iconic American brands in response to his attempts to protect American steelworkers.
“So now we will also impose import tariffs,” threatened Jean-Claude Juncker, the president of the unelected European Commission, at a black-tie event in Hamburg, Germany.
“This is basically a stupid process, the fact that we have to do this. But we have to do it. We will now impose tariffs on motorcycles, Harley-Davidson, on blue jeans, Levis, on bourbon. We can also do stupid. We also have to be this stupid,” he huffed.
Unphased, the U.S. President fired back on Twitter: “If the EU wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.,” he wrote.