Earlier this week, U.S. President-elect Donald Trump pledged on Truth Social to introduce a 25 percent tariff on all goods coming from Mexico and Canada, and an additional 10 percent tariff –above any additional tariffs – on all products from China coming into the United States of America.
He justified the announcement, claiming that although he “had many talks with China” about America’s opioid addiction crisis, China continued to funnel “massive amounts of drugs, in particular fentanyl” into the United States.
A variety of domestic factors weighs heavily in understanding how America continues to deal with this horrible drug crisis. Nevertheless, blaming someone else, or in this case another country, is a convenient way to reduce criticism that should be pointed internally. As we will see, the U.S. often says China is at fault for problems America created for itself.
Trump’s stubborn belief that tariffs work does not hold up to scrutiny.
By now, any American who pays serious attention to the news knows that tariffs are bad policy, used in part to suggest China is at fault for the cratering of manufacturing jobs in the U.S. when the truth is neither politicians nor businesses have successfully figured out how to modernize the U.S. workplace. Clinging to yesterday’s ideas will not solve today’s problems. Nor will directing blame where it does not belong.
One economist after another has pointed out that American citizens pay the cost of the tariffs even though politicians want their audiences to believe China will suffer because of them. Whether Americans fork over more money for food, luggage, or aluminum (as just three examples), they are the ones who continue to suffer from the ineffective tariffs against China. Meanwhile, Beijing reiterated yet again this week that no country wins when tariffs are in place.
Mexico and Canada also criticized Trump’s tariff threat. “The response to one tariff will be another, until we put at risk companies that we share,” Mexico’s President Claudia Sheinbaum said. Doug Ford, the premier of Canada’s Ontario said the tariffs would be “devastating to workers and jobs” in both the U.S. and Canada.
Trump, who originated the tariff bonanza in 2018, is not listening even though the evidence is clear. Think about this: The United States Department of Agriculture reported in 2022 that tariffs cost the U.S. roughly $27 billion in food-related exports over an 18-month period because items that would have gone to China did not.
Meanwhile, the National Bureau of Economic Research noted earlier this year that “import tariffs on foreign goods (in 2018 and 2019) neither raised nor lowered U.S. employment in newly-protected sectors.” It added that “retaliatory tariffs had clear negative employment impacts.”
Neither Trump nor current U.S. President Joe Biden, who has maintained the Trump-era tariffs and added to them, will admit these truths to the American people.
The U.S. wants to blunt China’s ability to export and limit its potential to use cutting edge technology, but its plans are not working.
It is somewhat ironic that on the same day Trump thundered about new tariffs, China’s Huawei unveiled its latest smartphone, an item entirely made with homegrown technology. As the New York Times noted, “Huawei has been working for years to position itself as synonymous with the country’s tech industry, as Apple is with Silicon Valley. Resurgence in spite of Washington’s controls is a crucial part of this image.”
Consider what Ilaria Mazzocco, a senior fellow at the Center for Strategic and International Studies, recently said to the Financial Times: “The U.S. wants to create alternative supply chains in partner countries… but what happens when it’s Chinese companies that are building those supply chains?”
In summarizing the cumulative impact of years of failed tariff policies, the Tax Foundation reports that U.S. GDP will decline by 0.2 percent and as many as 142,000 full-time jobs will be lost. It adds, “The Trump-Biden tariffs have raised prices and reduced output and employment, producing a net negative impact on the U.S. economy.”
People from all over the world continue to see China advance and America stumble. Enhanced tariffs will serve only to add to America’s unstable position on the global stage.
