Tariffs

Tariffs

Austin Swan, Reporter

A tariff is a tax on the import or export of goods from one country to another. Capitalist economists hate tariffs. The reason economists hate tariffs is because economists understand the importance of letting the free market be free.

Recently, , President  Donald Trump has expressed his approval of tariffs and has implemented 25% tariffs on all steel and aluminum imports with certain exceptions, as well as added 100$ on other imports from China specifically. One of the leading factors that pushed Trump to like tariffs is the idea that trade deficits are bad, when in reality, trade deficits mean nothing.

To have a trade deficit means to pay more on imports than you make by exporting. For some countries this is a good thing, for some countries this is a bad thing, and for a lot of countries this doesn’t matter.

Iran is the country with the 15th highest overall trade surplus, but I would still choose America’s economy over Iran’s because tax deficits or surpluses really don’t matter. A large influencing factor for Iran having a high trade surplus is that Iran has a lot of tradable oil.

Another reason the President expressed support for tariffs recently is because of the idea of a trade war. In a trade war is two countries actively attempting to damage each others’ economies, generally through tariffs of some sort.

Something the President has pushed, which is utterly incorrect, is the asinine concept that trade wars are a net benefit to America. Nobody wins trade wars.

A trade war will never lead to victory because trade wars lead to mutually assured destruction. Both sides often lose when it comes to trade wars. A country buying from another country more than it sells to that country is not an inherently bad thing.

If China were to tax all American imports at 50%, then presumably we would import less to China, and China would also be depriving their own citizenry, because those citizens now have to pay 50% more for a product just because it is American. Paying more for goods or services than you have to is generally not a great thing.

Forcing an entire population to unnecessarily pay extra is definitely not a great thing.

Another myth that fuels the flame of tariff promoters is the idea that through tariffs, we can bring back American manufacturing jobs. In reality, there is no need to “bring back” steel jobs. The US was up 5% in steel production last year, and almost every steel company in the country has seen a stock value increase over the past 10-15 years.

With new automation technology, it is also true that fewer employees are needed by manufacturing companies for production.

Nucor, the largest steel producing company in the country, had a stock price of $12.00 in 2000, their stock price is now $65.00. The American steel industry seems to be doing just fine with the free market. Having no tariffs on Chinese steel also means that the cost of home building goes down, which lowers the cost of houses on the market, which leads to higher employment in construction as well as real estate.

72% of steel used by America is already produced in America, there is no need for tariffs to come in and force consumers to pay extra for products. The two countries the US imports the most steel from are Canada and Mexico, which are not affected by the tariffs because of NAFTA.

If only using steel from your country is necessary to a flourishing country, Switzerland needs to be explained. Switzerland produces almost none of the steel they use, but of course this is not actually a bad thing because sometimes it is cheaper and more effective to import goods if your country does not have an effective way to get those goods themselves.

Capitalism and free enterprise are concepts central to the success of Western countries throughout history. The free market has risen more people out of extreme poverty than any other economic system, and was one of the driving forces in creating the greatest human civilization to ever exist. The market replaces old jobs with new jobs, there was once a time where being a blacksmith was a common profession, now there are basically no blacksmiths.