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  • Jeffrey Goldfarb

Tariffs

Trade War | Tariffs | Buffalo, NY | New Orleans, LA | Certified B Corp 

Theoretically speaking, a large country can only successfully implement tariffs if it doesn’t spark a trade war. If it does, the economy sacrifices a massive consumer surplus for minimal producer surplus and government revenue. Trade wars are not something that can be won and usually end up hurting all economies involved. The issue with this current administration’s call for tariffs is the rest of the world has made it clear, they will retaliate.

While the current White House softened its initial stance on tariffs with its allies, its position with China has only strengthened, growing from $30 to $60 billion in import tariffs. The official stance will be made on Thursday March 22nd. This position can be traced back to Trump’s initial campaign promises. A protectionist trading platform is one position the current administration has been consistent on. In the case of China they are raising tariffs to punish the country for “improper technology transfer.”[1] Essentially requiring firms wishing to do business in China to hand over patents and technology first.

As mentioned before, this will protect some firms, but ultimately hurt American consumers. China has made it clear it will not accept a punishment without a form of retaliation. China made it clear that it will target the United States’ agriculture sector, a base that largely voted for Trump in the 2016 election.[2]

Not just agriculture, but according to CNN and NPR, Boeing currently sells nearly half its jets to China.[3] “In 2016, Boeing’s then Vice Chairman Ray Conner said Chinese orders support about 150,000 American jobs.”[4] Those jobs would be at risk if China retaliates.

Should consumers be punished for China’s practices? Not many countries will come enthusiastically come to the United States’ defense after the White House’s erratic behavior, originally proposing 25% tariffs on steel, which targeted our closest allies. Sparking a trade war with one of the world’s largest and fastest growing economies could have devastating effects. If the government wants to protect its producers looking to tap into the global market, there has to be a way to do so without implementing policies that harm the vast majority of Americans not involved with those operations.


Trade War | Tariffs | Buffalo, NY | New Orleans, LA | Certified B Corp 

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[1] Wall Street Journal, March 22, 2018, U.S. to Apply Tariffs on Chinese Imports, Restrict Tech Deals

[2] Wall Street Journal, March 21, 2018, U.S., China Sharpen Trade Swords

[3] http://money.cnn.com/2016/12/16/news/boeing-china-jobs-trump/index.html

[4] https://www.npr.org/sections/parallels/2018/03/22/596011975/how-china-may-fight-a-trade-war-with-the-u-s

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