President Trump might want to keep in mind something Benjamin Franklin once said: “No nation was ever ruined by trade.” Although, given our current moment, perhaps the phrase is better understood in the inverse. Nations and the people in them are ruined by protectionism.
Despite evidence that a growing majority of Americans polled believe increased tariffs with our trading partners is bad for the U.S., President Trump recently announced that the administration will impose a 10 percent import tax on $200 billion worth of goods from China starting September 24. It gets worse. If China does not accede to US trade demands, the import tax rate will increase to 25 percent on January 1, 2019.
As expected, China has responded by imposing tariffs of 5 to 10 percent on $60 billion worth of goods from the U.S starting on September 24. That’s a lot of American industry, producers, small business owners, and merchants who’re going to have emptier wallets. It’s hard to imagine what the end goal is for the Trump Administration. Treasury Secretary Mnuchin was scheduled to meet Vice Premier Liu He to broker negotiations aimed at staving off a new round of tit-for-tat penalties. With the announcement of new tariffs, those negotiations are swimming with the fishes.
With the Chinese government’s response we now expect President Trump to begin the process of imposing tariffs on an additional $267 billion worth of goods from China. Meaning, when all is said and done the Trump Administration will have raised import taxes on every single item U.S. companies and consumers buy from China. From t-shirts to electronics, your goods will now cost you more at the checkout.
Indeed, we have now entered the Trump twilight zone of tariffs, with no end in sight. Because taxpayers are the ones paying for these tariffs through higher prices on goods as well as Trump’s hush money to Ag producers. By now it’s also clear that we should temper any hopes that the Trump Administration’s tendency toward tariffs are “temporary.”
For the people in the back: This bad trade war policy negatively affects taxpayers, and it will only get worse with time.