Tariffs are often hailed as a tool to protect domestic industries and bolster political agendas. However, recent analyses reveal that their implementation may be causing more harm than good to the very people they intend to help.
Kent International, a New Jersey-based bike manufacturer, exemplifies the strain tariffs can place on American businesses. The company is currently shouldering an average of 23 percent tariffs on bike parts imported from China. \"The help we need is tariff relief for any American assembler,\" stated Arnold Kamler, chairman of the company board and a prominent figure in the U.S. bike industry. \"With tariff relief, we could grow our U.S. business five-fold in three years.\"
Similarly, Deena Ghazarian, founder and CEO of Austere, a consumer tech accessories company, shared her struggles: \"To be clear, I'm the one who paid the tariffs. China did not,\" she explained. \"I had to absorb these costs of the tariffs to avoid pricing my products out of the competitive accessories landscape.\"
These challenges highlight a broader issue. Contrary to the intention of protecting domestic industries, tariffs are effectively acting as taxes on both consumers and producers. A report from Moody's Investors Service found that American consumers bear nearly 93 percent of the costs associated with tariffs on Chinese goods. This increased financial burden translates to less disposable income—for instance, fewer visits to favorite restaurants, or difficulties in covering unexpected expenses like home repairs or medical bills.
Moreover, the long-term economic repercussions of tariffs are significant. By making imported goods more expensive, tariffs reduce the demand for these products, which can inadvertently strengthen foreign currencies and make American exports less competitive internationally. This chain reaction can lead to declines in overall economic output and employment. In fact, a 2021 U.S.-China Business Council report indicated that the trade war with China has already reduced U.S. economic growth and led to an estimated loss of 245,000 jobs at its peak.
History serves as a cautionary tale. During the Great Depression of the 1930s, the use of high tariffs to protect national industries prompted retaliatory measures from other countries. This led to a global increase in tariff rates, sparking a currency war and damaging world trade. The resulting economic stagnation underscored that no country is an island; interconnectedness means that protectionist measures can have wide-reaching negative effects.
In conclusion, while tariffs may offer short-term political advantages by safeguarding certain industries, their broader economic impact tends to disadvantage consumers and stifle overall economic growth.
Reference(s):
cgtn.com
