Introduction:
Trump’s tariffs on China have been all the rage in the media over the past few days. Most news about them is apocalyptic and lacks real depth. However, there was an article in RealClearMarkets today about the real scale of Trump’s tariffs. Hint: They’re not really all that influential for the US.
This excellent article is called “The Media is Lying to You about Trump’s China Tariffs” and was written by Brett Arends.
Summary:
With all of the apocalyptic messages from the media over the past few days about tariffs and trade, it’s important to examine their actual scale. That is exactly what Arends does.
He begins be describing what the media pundits are doing. They want to see the economy fail. They want to see a trade deal fall through. They want to see the stock market tank. All because they are more concerned with hurting President Donald Trump than they are with the well-being of the American people. They aren’t reporting honestly about the tariffs, the supposed dangers are minuscule in reality.
Arends then notes that tariffs aren’t magical forces that shred a taxpayer’s money. Instead they are just another federal tax that is paid by consumers and producers on goods produced in a foreign country. So how big is that new tax?
About $30 billion a year according to Arends. Not that big when considered in the grand scheme of things; the total amount paid in taxes last year was $5.51 trillion (that includes state and local governments). So the taxes from the tariffs are really just a drop in the bucket. Yes, all costs matter. But these are relatively inconsequential.
Arends then describes the stock market overreaction. The markets plummeted after the new tariffs were introduced, but the total effect of them on the economy isn’t really that consequential. Yes it might hurt short term profits, but not to the extent that markets are fearing.
Arends ends the article by describing the benefits of tariffs. They are a tool for trade, after all, so there should be some benefits. Turns out, the benefits are numerous. After companies find new suppliers for the goods that have had prices raised by tariffs, they will have a steady stream of materials from countries that aren’t geopolitical competitors with the US. That will be helpful.
Additionally, if tariffs lead to a trade deal, then they will be able to compete much more effectively in China. Finally, tariffs are a great way to pressure China. We don’t export that much to them, but they export a lot of goods to the US. That means we have leverage with tariffs. Hopefully President Donald Trump can take advantage of that leverage.
Analysis:
I liked this article because of how rational it is. Instead of getting held up on emotions or worrying about changes in fractions of a percentage point, Arends focuses on what the tariffs actually mean. They mean the US might be able to reach a suitable deal with China, and that the US is no longer content with putting up with every Chinese break in the trade rules. I agree with that wholeheartedly.
Yes, free trade is ideal, as I outlined in a recent article. But if the other country is cheating, then trade isn’t really free. President Trump has shown that we have leverage, we just have to use it. I think we should.
Conclusion:
Read this article if you are interested in the recent trade spat. Not only is it interesting, but it is also highly informative. I highly recommend it.
By: Gen Z Conservative
