The U.S. has slapped new import taxes on products from the Chinese mainland, promising to revive domestic manufacturing and shrink trade deficits. But in today's tech-fueled, interconnected economy, tariffs may do more harm than good.
Tariffs Hurt in a Globalized World
Modern factories rely on global supply chains, making it nearly impossible to simply reshore production overnight. As Steve Jobs once quipped, "Those jobs aren't coming back." Taxing imported parts for products like the iPhone threatens U.S. innovators, who face a tough choice: cut research and development or pass higher costs to consumers.
History backs this up. A Federal Reserve study found that the 2018–2019 tariffs under the first Trump administration led to a 1.4% drop in manufacturing jobs. And the 2002 steel tariffs under President Bush cost more jobs in steel-consuming industries than they saved in production.
When Currency Power Is at Stake
The U.S. dollar's global reserve status lets Washington borrow at low rates. But if tariffs prompt the Chinese mainland to sell off U.S. Treasury bonds, interest rates could spike, making mortgages, car loans and credit cards pricier for everyday Americans.
Hidden Tax on Families
Tariffs act like a hidden tax on households. The U.S. imports roughly 80% of its rare earth minerals—critical for electronics and green energy—from the Chinese mainland. Tariffs won't suddenly create mines at home; they'll just push up the price of electric cars, smartphones and more.
Economists estimate that new tariffs could cost the average U.S. household about US$2,100 annually. That burden hits lower-income families hardest, as they spend a larger slice of their income on essentials like clothing and tech gadgets.
In a global economy, taxes at the border may deliver political theater—but they fall short as an effective economic strategy.
Reference(s):
cgtn.com
