Myrtle Beach, SC, Orlando, FL January 22, 2016
Owatonna, MN Correspondent-On the surface, the United States government imposing a tariff on a country that doesn’t play fair when it comes to trade, like China, sounds like a good thing to do. We stand up to a cheater, exert our sovereign rights, and possibly add tax revenue to the balance sheet. A tariff would prevent China from artificially cutting their prices on their exports, thereby gaining market share at the expense of US producers or producers from other countries.
However, appearance and reality are not equal here. First, the balance of supply and demand for the taxed goods is thrown out of whack by tariffs. Raising the price of a good discourages consumption and may increase inflation if carried to extremes. Consumers will either not buy that item or substitute another item, (i.e. buying chicken rather than beef if beef becomes too expensive).
If we impose tariffs on Chinese goods, they may drop the price of those taxed goods even further to offset the tariff. This might spur the US to impose higher tariffs. Eventually, China may cease exporting that item to the US and turn to other buyers.
Second, one tariff often starts a tariff war. China may retaliate by imposing a tariff on our exports to them. That hurts our export economy as much as cheap goods imported from China hurts our domestic economy. We might retaliate by taxing other imports. Then they may do the same to us. It should also be noted that many products are manufactured from US raw materials in China, so tariffs may also end up hurting the US economy.
Real, actual free trade is nearly impossible in today’s world, but it is the best method for maximizing prosperity for all people. Free trade allows open markets to determine the price and value of every good or service produced. Tariffs of any sort only end up increasing costs and decreasing prosperity.
Prescott Valley, AZ Correspondent-Though Donald Trump released a U.S. China Trade Reform plan, addressing the economic relationship between China and the United States, his latest proposal of a 45% tariff was not included in that reform.
Mr. Trump had originally proposed a 25% tariff, but his current plan appears to be an effort to set the tariff at the higher level in order to kick-start the kind of trade negotiations necessary to set China and other countries straight concerning all present trade issues. He obviously believes that with an immediate and upfront challenge to China that they would agree to concessions such as opening up their markets and discontinuing currency devaluation. China’s current policy of purposely holding down the value of its currency, to give manufacturers an advantage when selling their products to the United States, has been part of their tactics for some time. Their currency devaluation has made it literally impossible for American companies to compete with Chinese companies, which has taken a huge toll on American markets.
Mr. Trump feels that he is the one to negotiate with the Chinese, and make the demands that they open their markets, stop devaluing their currency, or pay for the right to export their products to America through the tariff, but economic experts feel that a tariff is not the way to respond to currency manipulation, which could be very costly. As they see it, a tariff would only serve as an irritation, as the Chinese would most probably appeal to the World Trade Organization (WTO) to challenge the tariff, and they might also respond by closing their markets to exports from the United States, which would seriously affect American jobs and any return to manufacturing. This move would be just as harmful to American companies that are based in China that produce products there such as cars, computers, tools, clothing, and hundreds of other items. Challenging the Chinese in these areas would lead to innumerable conflicts and likely cause trade wars.
In order to counteract any kind of tariff, China would significantly increase prices on goods coming into America, which would be bad for Americans, as so many products that America imports from China are no longer made in America, and to pay increased prices on these products would be a strong disadvantage, at a huge cost, to American consumers. Even if Chinese goods were curtailed from coming into America, the same types of products would simply be imported from other countries with similar trade procedures as China’s.
It is hard to determine exactly what Trump’s tariff plan would do for trade in its current state, particularly if Trump is thinking of negotiations down the line concerning unfair trade practices across the board and other issues, but with the unreliability and the calculating tactics of the Chinese, and their own volatile economy, they would likely not be interested in changing their export policies or the devaluing of their currency. They don’t want to lose the American market, and perhaps if they are given a strong enough warning from a chief negotiator like Trump, they might have second thoughts about changing their wanton ways concerning trade; however, even the warning of a coming tariff might not be enough to motivate them, particularly when they know they can run to the WTO for help and simply raise prices on their goods, or start calling in on the loans we have made with them.
Maybe the Donald has something more up his negotiating sleeve, and many hope that he does, but ultimately the risks of a tariff currently outweigh any possible benefits of helping the American economy, reestablishing manufacturing facilities or providing much needed jobs. If he does have a magic wand, the processes involved would be extremely painful, chancy and cost prohibitive. Americans at this point in time simply cannot absorb the price tag of a tariff.
Sheffield, Jamaica Correspondent-Let’s get something straight, Donald Trump is probably the biggest jerk I’ve seen on TV. Thank goodness I’ve never met the man in person. Now that my conscience is clear, let’s talk about serious business. It was just recently, sir Donald Duck mentioned he’d love to see a tariff imposed on goods imported from China. If I can recall clearly, his words were, “I would do a tax. And the tax, let me tell you what the tax should be…the tax should be 45%.” Not only is this man filthy rich, but he’s straight up delusional. Does Donald Trump only think of himself? Can you imagine the loss that would be incurred on the country??
Economists have estimated that a tariff such as heavy as this one, would result in a “deadweight loss”. Sure, the country would amass in revenue, but the total loss would be greater. Donald Trump’s plan to impose a tariff on goods imported from China would spell more trouble than good, as Americans would be forced to spend more money on clothing, food, electronics and everything else that is made in China. Truly, Trump’s plan of a tariff imposition was not declared with good judgment or the country’s welfare, but from the mouth of a madman who can’t seem to shut up. If you want America to become unbearable and uninhabitable, vote for Trump.
Gastonia, NC Correspondent-It pains me to say this, since I pride myself in living in one of the richest, most powerful nations on the planet, but I’m not sure we want to get into a trade war with China right now. The Chinese play by a different set of rules, and with the (more or less) centralized control of their economy, they have the ability to work as a unit, whereas our free (more or less) market economy has uncountable factors to keep track of and look after.
Tariffs worked when the economy was less globalized. If a certain country embarked upon unfair trade practices, we could jack up tariffs to fix the prices of their imported goods to ensure that native firms had a level playing field. The problem today is that with the global shipping network and increased communication worldwide, if we start making Chinese widgets more expensive, the Chinese will find another buyer for those widgets. If we don’t produce them here, or if our products are unreasonably expensive, then our customers suffer. Similarly, if the Chinese impose tariffs on our widgets, we find other markets for them…which leads to a sort of proxy price war where we are trying to fight in France, Russia, Egypt, etc.
Since our government can’t order US firms to set prices or pay workers a certain rate, it’s harder for us to artificially inflate or deflate prices. There will always be one firm trying to undercut competitors and throw the system out of whack. That’s one of the things that makes us great at home, but it can lead to issues overseas.
I think we’re better off playing the long game here. China may win the battle in the short term, but there are already fissures in the Chinese system, and their often-antiquated factories and means of production are creating problems. Eventually, when their goods aren’t delivered on time or the quality becomes the stuff of jokes, we will capitalize and recapture our market share (and profits).