Implemented tariffs prove to be a triumph for Trump's administration
It seems like President Trump's discourse on trade and tariffs is littered with misinformation. Economically speaking, most of his statements about his beloved topic are false. He recently claimed that he had garnered billions from foreign countries through tariffs, but in actuality, American importers bear the brunt of these taxes, often passing the costs onto consumers.
Economists have been shouting it from the rooftops: tariffs are not the solution for balancing trade deficits, as Trump desires. It's possible Trump is aware of this, yet he continues to pursue this economically harmful policy because it works wonders for his political standing.
During his first term, his tariff-related victories were numerous. In a dispute with Colombia over migrant deportations, Trump threatened to impose 50% tariffs. The Colombian government relented, and the tariffs were never enforced. Following this, Trump announced 25% tariffs on Canada and Mexico as a means to combat illegal immigration. After assurances from Mexico's President and Canada's Prime Minister regarding anti-smuggling measures, Trump suspended these tariffs.
From Trump's perspective, tariffs serve as a weapon, a tool to threaten and cause discomfort to his opponents. Complex economic interplays are unnecessary considerations in this regard. In these instances, it was apparent that the announced tariffs would not be enacted due to the governments' quick responses. The political significance of these "successes" is insignificant at best.
However, Trump's latest tariff round aims to punish all trading partners with 25% duties on steel and aluminum. The EU is already prepared to counter with tariff reductions on American automobiles in the context of a "deal." While it is unclear whether Trump's tariffs are mere bluffs, it is essential to note that his current tariff feud is an extension of his first term's policy, which negatively impacted the U.S. economy, according to economists' predictions.
Studies suggest that the tariff increase on Chinese products in 2018 led to job losses in the U.S. industry, mainly through damage to complex international supply chains and increased costs for U.S. companies. Regardless of the theoretical impact, Trump continues to sell this trade policy as a success, with widespread support from Americans due to his persuasive narrative.
Yet, a critical economic evaluation of Trump's trade policies fails to gain traction in the United States. Further complicating matters, the Democrats continued certain policies under Joe Biden, and the trade deficit continued to grow, serving as fuel for Trump's tariff advocacy.
In conclusion, while Trump's tariff policies might yield short-term political gains, they come at the expense of significant economic risks. These risks include higher consumer prices, disrupted supply chains, reduced business investment, and job losses, to name a few. It appears that the ongoing cycle of a growing trade deficit and increasingly loud calls for protectionist measures will persist.
Despite the economic risks associated with his tariff policies, such as higher consumer prices and job losses, President Trump continues to champion them as successful. The ongoing cycle of a growing trade deficit and protectionist measures seems set to persist. The economy, specifically, has been negatively impacted by Trump's tariff policies, according to numerous economists' predictions.
