Will Trump's tariffs really work?
By Owen Kamphuis
web posted November 18, 2024
In a recently published article on American Thinker titled "Trump's tariffs will contribute to the US economic boom," Dr. Howard Richman and Jesse Richman argue just that. They mainly take issue with the point of economist David Herbert, who argued that tariffs should not be used. The Richmans responded to him with their article that claims that the tariffs will lead to an upcoming US economic boom. However, I believe that David Herbert does have a point.
One of the strongest arguments for Trump's tariffs is that American industry has been surpassed by China on the world stage. This is true, as the US runs a trade deficit with China. In 2022 alone, the US imported $562.9 billion worth of products from China, whereas the US only exported $195.5 billion to China. This massive trade deficit clearly results in money leaving the American system for China, which hurts the American GDP. In the documentary "Is Walmart Good for America," PBS shows how Walmart has consistently chosen to buy from Chinese manufacturers instead of American manufacturers. However, while this has meant much lower prices for American consumers, it has also put some Americans out of jobs. Trump's tariffs are meant give people their jobs back. This keeps money in the country and gives it to Americans.
Another argument that the Richmans make is that, while China is using comparative advantage, trade is not fair. The concept of comparative advantage is based on the idea that each country makes what they're relatively best at and trade to each other for their needs. However, the playing field isn't level in US-China trade. The Chinese capital of Beijing, which has the highest hourly minimum wage in the country, requires firms to pay workers US$3.7 per hour. The district of Columbia, the US's capital and highest minimum wage location in the country, has an hourly minimum wage of US$17. Clearly, American firms cannot compete with Chinese factories that have lower operating costs of this magnitude. This is why Trump's tariffs idea resonates with American voters.
These are the pros to Trump's tariffs, and these are what the Richmans highlighted in their article. However, I believe that there are side-effects worth considering. One of the strongest complaints against the Biden administration is that the cost of living is so high. In fact, some analysts believe this to have been a driving force in why Trump was elected. If you can't put food on the table, of course you won't vote for the party in power! However, whatever Trump's other laws do, his tariffs will almost certainly lead to higher costs of living. If you shop at Walmart, start looking at the stickers on the back of products. An overwhelming majority of these will say "Made in China." This is because, of course, the production costs are much lower in China than in the US. If Trump introduces a 10% tariff on all Chinese imports, these goods immediately become 10% more expensive. That means that, for consumers, everything becomes more expensive no matter if they buy the Chinese-produced goods they are accustomed too or if they buy the already more expensive American-produced goods. True, more "Made in USA" products will be bought, but the Americans buying them will have to pay higher bills.
Another possible side-effect of American tariffs on imports is that other countries will retaliate with tariffs on the US. Of course, most countries won't want to make the cost of living in their countries higher, but when high tariffs are placed, countries can be expected to retaliate. Another possibility is that foreign governments will place retaliatory tariffs on the US, which will make their consumers go to Chinese products that American consumers now buy less of. This is why, on further consideration, a 10% only on Chinese imports would make more sense for the sake of American citizens.
Finally, the Richmans also quote an Oren Cass commentary titled: "Trump's Most Misunderstood Policy Proposal" where he argues that manufacturing drives innovation and points the Apple's failed attempt to make its high-end Mac Pro in Texas. Yes, bringing American manufacturing back will bring back the resources and innovation to be able to produce high-tech products. But, as shown by Apple, it could very well take time. By immediately putting in place a 10% tariff on foreign imports, the result could be that the effort is too much, too fast. American firms would not have time to up their production to be able to keep up with demand, which could lead to a shortage. This could very well cause products to be bought from China anyway, just at a higher price to Americans.
In conclusion, Trump's tariffs are driven by a good idea: America needs to wake up to the fact that China is catching up fast. Trump's tariffs could have the effect that the Richmans describe: more jobs for Americans. But it could just as well result in pointless higher prices for Americans. The only way to discern what will happen to the American economy as a result of these tariffs is to wait and see. 
Owen Kamphuis is an AP economics student of Dr. Howard Richman © 2024 Owen Kamphius
