Throughout his campaign and during his first few days in office, one of President Donald Trump’s main policies was imposing tariffs on foreign countries to help America become a “manufacturing superpower” again.
According to ustr.gov, the United States is the largest importer in the world and they spent a total of $3.2 trillion on imports in 2022. The top suppliers of U.S. imported goods in 2022 were China with 16.5% of total imports totaling around $536.3 billion, Mexico totaled about $454.8 billion and Canada totaled about $436.6 billion. These three exporters are the ones that are targeted the most with Trump’s tariffs.
“We are establishing the External Revenue Service to collect all tariffs, duties and revenues,” Trump said. “It will be massive amounts of money pouring into our treasury coming from foreign sources. The American Dream will soon be back and thriving like never before.”
During his inauguration, Trump voiced his opinions on tariffs and how it would benefit the American economy. Trump once called tariffs the most beautiful word in the dictionary, and he has brought up the idea multiple times as a fix for America’s economic relationship with the rest of the world.
“Instead of taxing our citizens to enrich other countries,” Trump said. “We will tariff and tax foreign countries to enrich our citizens.”
Tariffs have a bad reputation as they have, in the past, triggered many trade wars. Trump’s tariffs set ideal conditions for a trade war which effectively leads to countries countering each other’s tariffs by placing higher and higher tariffs on the other. These events mirror the trade wars of the 1930s, which led to the Great Depression and the weakening of the American economy.
Ford, one of the biggest American companies, is an example of tariffs hurting the economy. According to investopedia.com, Ford gets a lot of their parts from foreign countries, all of which Trump plans or has already imposed tariffs on. With major reliance on Mexican and Chinese materials and products, American companies are being affected because they have to pay higher prices for raw materials, which leads consumers to also have to pay more for everyday products.
“We will build automobiles in America again at a rate that nobody could have dreamt possible just a few years ago,” Trump said.
During his inauguration speech, he mentioned how he was going to ramp up American manufacturing, but the automotive industry would suffer if he imposed large percentages of tariffs on major exporters for America.
“We will drill, baby, drill” is also a common phrase Trump and his supporters have continuously chanted throughout his campaign and during his inauguration. What doesn’t make sense of this whole situation is how Trump revoked the electric car mandate and imposed these tariffs while being endorsed and maintaining a close friendship with Elon Musk. These two policies would harm Tesla’s manufacturing process and their sales.
As the price of imported goods increases and businesses have to pay more for their products, consumer prices also increase. According to studies, households are estimated to spend thousands of dollars extra each year due to tariffs. The middle and lower classes will suffer the most as they have to begin paying more for everyday essentials despite receiving the same salaries.
Along with higher prices, jobs will also be affected. Trump’s trade policies, mainly tariffs, are estimated to cost the U.S. a total of 245,000 jobs. China’s own tariffs to retaliate against America will reduce U.S. exports, which hurts American farmers and businesses. Increasing the costs of imported materials also hurts U.S. manufacturers, leading to layoffs in hopes to compensate for prices. If no layoffs occur, many businesses will fail and there will be major loss of businesses and jobs.
Tariffs could also be imposed up to 100% on Taiwanese chips based on businessinsider.com. Many valuable American companies, such as Apple and Nvidia rely on chips from Taiwan for their products, and tariffs will result in higher prices. This tax can weaken the relationship that Democrats have spent so long trying to strengthen and at the same time will strengthen China’s manufacturing. China’s biggest competition leaving the Taiwanese chip market gives them more access to these chips which is the opposite of Trump’s goals.
Will “The golden age of America” really happen under Trump’s presidency or will the economy crumble?
