The long term damage tariffs inflict on American workers and companies
One thing the Biden administration has in common with the Trump administration is tariffs.
Trump slapped tariffs on a numbers of goods from different nations – and Biden has shown no inclination to remove them. As students of trade understand, tariffs are a tax on American consumers and businesses (not foreign nations – people trade, not countries…always have, always will).
This tax has continued to bite consumer wallets through the depths of the pandemic, and into the supply chain and inflation snafus of today. As the Tax Foundation notes, if our resident political class was really interested in fighting inflationary pressure, and giving the economy a hand, it would end those tariffs today. Otherwise, the damage done to domestic manufacturers may be permanent:
When tariffs are put into place, it disrupts established trade flows, but when tariffs are lifted, trade patterns do not automatically snap back in place. One of Cox’s findings is that “declines in the competitiveness of U.S. exports due to the tariffs are highly persistent—global market share remains depressed relative to pre-tariff levels for at least 8 years after the tariffs are lifted. Likely a result of this loss in market share…steel-intensive industries suffered persistent declines in employment in response to relatively high steel tariff rates.”
Economists since the 18th century have been making the argument that protectionist trade policies can only backfire. As lawmakers today look for ways to boost American industry and reduce costs for consumers, they should pay attention to the mountains of evidence that the Trump-Biden tariffs have harmed American consumers and businesses. Removing the tariffs is perhaps the most readily available, timely, and effective means to support U.S. industry and jobs while lowering costs for consumers. It would be a nice Christmas gift.
It would, indeed. But hundreds of years of research and common sense on the harm tariffs inflict means little to the politicians desperately searching for new ways to tax American workers and companies.