Tariffs have become a major topic of international economic discussion and a policy priority of Trump’s administration.
Trump, following his “America First” agenda, plans to raise tariffs on goods from various countries, with particular attention to China.
Trump has promised to impose a 25 per cent tariff on goods coming from Columbia.
The US imports about 20 per cent of its coffee from Colombia, worth nearly $2bn (£1.6bn). Therefore, raising tariffs on Columbian goods would mean higher coffee prices for consumers.
Also relevant was China’s nearly $1 trillion trade surplus from exporting to nations such as the US.
These measures aimed to reduce the trade deficit and revive domestic industries, which many on the right believe are being damaged by unfair trade practices.
In Donald Trump’s first term in office, many tariffs were implemented on steel, aluminium, washing machines and Chinese-made products.
The economic impact of these tariffs remains a contentious issue, with both strong proponents and critics of such policies.
What Are Tariffs?
Tariffs are taxes on goods crossing an international border.
Tariffs can be described as protectionist trade initiatives. Protectionism means the restriction of trade to protect domestic industries from foreign competition.
Protectionism intends to make foreign products more expensive, encouraging consumers to purchase goods manufactured in their nation. This would reduce foreign competition and encourage domestic economic growth and less economic reliance on foreign nations.
However, while the intentions may seem straightforward, the outcomes are far from simple.
The Pros of Tariffs
Protecting Domestic Industries: Tariffs can shield domestic manufacturers from cheaper foreign competition. By imposing additional costs on imported goods, local industries are given breathing space to grow, invest, and hire more workers.
For example, Trump’s tariffs on steel and aluminium were aimed at revitalising the continually struggling U.S. steel industry, ensuring its survival in a competitive global market.
Reducing Trade Deficits: A major goal of Trump’s tariff strategy was to address the U.S. trade deficit, particularly with China.
A trade deficit refers to a nation importing less than it is exporting.
By making imports more expensive, tariffs can reduce the volume of goods purchased from other countries, narrowing the trade gap.
Encouraging Fair Trade Practices: Tariffs can be used as leverage in negotiations to push foreign governments to play by the rules.
Trump’s administration argued that tariffs were necessary to pressure countries like China to stop unfair practices such as dumping goods at artificially low prices or engaging in intellectual property theft.
The Cons of Tariffs
Risk of inflation: One of the most significant downsides of tariffs is the increased cost for consumers. When companies are forced to pay tariffs on imported goods, they often pass these costs on to buyers.
This can lead to higher prices on everyday items, from electronics to household goods, effectively acting as a hidden tax on American families.
Retaliatory Measures: Foreign countries often respond to U.S. tariffs by imposing their tariffs on American exports.
For example, China retaliated against Trump’s 2018 tariffs by targeting U.S. agricultural products, such as soybeans, causing significant losses for American farmers and necessitating government subsidies to offset the impact.
Disruption of Global Supply Chains: In an interconnected global economy, tariffs can disrupt supply chains, making it more expensive and complicated for businesses to source materials.
Companies that rely on imported components may struggle to remain competitive, which can ultimately hurt the very industries tariffs are meant to protect.
While tariffs can be a powerful tool for addressing trade imbalances and protecting domestic industries, they are not without drawbacks.
Trump’s tariff policies sparked a heated debate about the balance between safeguarding U.S. interests and maintaining open, free trade.
For some, the tariffs were a necessary step toward levelling the playing field. For others, they represented a short-sighted approach with unintended consequences.
As the U.S. under Trump continues to navigate its role in the global economy, the debate over tariffs remains highly relevant.
The key challenge for policymakers is to weigh the benefits of protectionism against the costs to consumers, businesses, and international relations.
Featured Image Credit: Pexels Free Photos.
I am a third-year Politics and Journalism Studies student at the University of Stirling (2022-) and a writer and sub-editor for the Brig for over a year (Nov. 2023-), focusing mainly on political topics.
