no avatar

Trade war has real consequences for Americans

Los Angeles Times • May 15, 2019 at 7:30 AM

China has been breaking trade rules and cheating its way to manufacturing dominance for well over a decade, despite efforts by a succession of U.S. presidents to get it to abide by international norms. That's the main reason President Trump has tried to raise the pressure on China by imposing ever-larger tariffs on a growing number of Chinese goods.

Trump's decision to ratchet up tariffs came after a setback in his effort to persuade Chinese leaders to make fundamental changes in their economic policies. After five months of trade talks, Chinese negotiators reportedly reneged on some concessions they'd previously agreed to.

But let's not kid ourselves: The tariffs have imposed real costs on Americans, even though Trump keeps pretending that they don't. And it remains to be seen whether they will persuade China to change its ways.

Last week Trump raised tariffs to 25 percent from 10 percent on $200 billion in Chinese goods, most of them components and equipment purchased by American businesses. He also queued up 25 percent tariffs on an additional $325 billion worth of imports, extending the levies to almost all Chinese goods arriving in U.S. ports — including the sorts of consumer goods that the earlier rounds of tariffs avoided.

But China, which isn't as dependent on U.S. buyers for its exports as it used to be, isn't folding yet in the face of Trump's bluster. On Monday it announced yet another tit-for-tat increase in its own tariffs on U.S. goods., triggering a trillion-dollar stock-market sell-off. China's tariffs on farm goods and other products haven't been as broad as Trump's, but they've helped cause U.S. export growth to stall and agricultural prices to continue to slide.

Nevertheless, Trump has continued to make nonsensical statements about how Americans aren't being hit by the tariffs on Chinese goods, even as he bragged about how much money the levies were raising for the Treasury. Although the tariffs aim to reduce demand for China's goods by increasing the cost to buy them, the truth is that tariffs are taxes paid by U.S. importers, who pass as much of the cost on to their customers as they can. Like all taxes, they are a drag on the economy.

And as numerous economists have pointed out, not only do tariffs raise the price paid by Americans for imported goods, they lead domestic manufacturers to raise their prices opportunistically as well. They also give U.S. companies with global supply chains an incentive to move more production offshore, to the detriment of U.S. workers.

It would be one thing if the president were asking the country to put up with some temporary pain in an effort to bring about change in China. But his inability or refusal to acknowledge the costs and who's paying them suggest that, successful or not, he'll keep using tariffs to bend U.S. trading partners to his will. And we'll keep paying for it.

(c) 2019 Los Angeles Times

Johnson City Press Videos