If you\u2019re at least vaguely aware of American (or even just global) politics, you will have heard of Donald Trump’s recent implementations of tariffs on China, Mexico, and Canada. Or wait no, he came to an agreement with Mexico and Canada to\u2026 Continue doing the same things at the border they were doing before? So Trump got rid of the tariffs. Oh, but then earlier last week he enforced the tariffs on Mexico and Canada again with no compromising. Actually, sorry, nevermind, he cancelled those too. But now he says they\u2019ll be back in action starting April 2nd.<\/p>\n\n\n\n
Truly the art of the deal.<\/p>\n\n\n\n
Of course, it makes sense that Trump\u2019s economic policies are disastrous, inconsistent, and noncommittal \u2013 Trump has never been a good businessman \u2013 of course he\u2019s running the country\u2019s economy into the proverbial dumpster. All you need to do is look at the history of Trump\u2019s failed enterprises and you get an idea for how much of an idiot he is when it comes to economics. Trump Casinos, Trump Shuttle, Trump Vodka, Trump Mortgages, Trump Steaks, all went bankrupt or were discontinued within 5 years of their inception.<\/a> It seems like anything with the name \u201cTrump\u201d in it is destined for failure, with the most obvious case study probably being the man himself.<\/p>\n\n\n\n Anyway, I can make fun of Trump all day (and will do so gladly), but I like to think of myself as a skilled writer, and that\u2019s too low hanging fruit to be considered as talented prose. So instead I\u2019d like to spend this article briefly covering what tariffs look like, what they do to an economy, and hopefully parsing some of the most foolhardy economic policies I have ever seen (trust me, I know a lot about Reaganomics).<\/p>\n\n\n\n So what actually are tariffs? Pretty much, they\u2019re a tax enforced on imports by the federal government. The importing entity pays the tax to the government, and this results in that price being forked onto the consumer. In order for a company to stay profitable, it must offset the increased price of imported goods by increasing the selling price. <\/p>\n\n\n\n The intended effect of tariffs is twofold. Firstly, the government gets to collect extra revenue from taxes that it can spend on the variety of essential services it provides to citizens (which are seemingly dwindling)<\/a>. And secondly, it incentives companies to locate manufacturing domestically rather than in foreign factories to lower costs.<\/p>\n\n\n\n Unfortunately, in practice, neither of these effects really function as intended. Increased tax revenue doesn\u2019t really help when it\u2019s going to subsidize the vanity projects of billionaires that Trump\u2019s in bed with<\/a>. And more importantly, the opportunity cost of substantially higher prices for consumers to pay offsets any potential benefits. It\u2019s estimated that tariffs in the form Trump proposed would cost an average American between $1600 and $2000 yearly.<\/a> Within a day of the second implementation of tariffs, the Dow Jones Industrial Average fell by almost 800 points.<\/a><\/p>\n\n\n\n As for moving company manufacturing to the United States \u2013 this is pretty much destined to fail. As a country, the US is simply incapable, both in terms of infrastructure and availability of labor, to do all of the manufacturing work it imports domestically. The reason companies export manufacturing to other countries is generally because labor laws are a lot less protective in periphery nations like China and much of Africa. It\u2019s a tragic reality that the regions that exploit workers the most are the ones with the most manufacturing occurring in them because it\u2019s where it\u2019s cheapest. While the US may be on the trajectory of returning to its history of sweatshops full of 12-year-olds, we\u2019re not there yet, so it\u2019s impossible to see production occur on the scale it needs to in the US to make up for so many products no longer being imported.<\/p>\n\n\n\n