In the last election and on the global stage, President Donald Trump talked tough on trade. It’s us versus them and we’re losing, he says. Put simply, he views the current trade deficit, when we import more from a country than we export to it, as detrimental to American jobs. Since January, that trade deficit is $264.4 billion.
Our biggest trading partners, China, Canada, Mexico, and Japan have been able to sell more to us than we’ve sold to them, and that has left us worse off, says Trump. Tariffs, taxes placed on specific products that enter our country, will help balance that.
But that isn’t true.
To begin, tariffs raise costs for foreign firms, but that means that American businesses that rely on imports to source their products will themselves face higher costs. And that gets passed on to the consumer.
What’s more, globalization has made the cost of sourcing products from foreign markets much cheaper. Supply chains are now global, and that’s a good thing. It’s made products cheaper for consumers and producers alike.
In response, countries may retaliate. Then, we’re looking at all-out trade war. Kentucky bourbon, Harley Davidson motorcycles, cigars, and even peanut butter exported to the 28 European Union countries will have additional tariffs beginning Friday. Canada and China have threatened more.
That’s bad news for both workers and consumers, regardless of who fired the first shot.
North Carolina exports $32.6 billion of goods and services, according to the International Trade Administration. Over 150,000 jobs directly rely on exports of chemicals, transportation equipment, machinery and more. More than 36 percent of those originate from the Charlotte area.
Who will be the most affected by tariffs? Think beer drinkers and employees at automobile assembly plants, as well as pork farmers and agricultural machine companies. And everyone who depends on these industries.
North Carolina brewers have warned that tariffs on aluminum and steel will affect their bottom line, potentially raising the price of beer for you and me.
Daimler and its subsidiary Mercedes-Benz project that retaliatory tariffs will hurt profits. That affects plants in Gastonia, Cleveland, High Point, and Mount Holly, and Charleston and Gaffney in South Carolina, which employ more than 6,500 people. Thousands more will be indirectly affected.
Both states voted for Trump in the 2016 presidential election. Why would he punish those voters with tariffs that will hurt investment and affect jobs?
There are thousands of goods produced here that rely on parts, commodities and special technologies from abroad. And millions of consumers and workers depend on trade of those goods for their well-being.
The U.S. is the dominant economic power because of decades of free trade and free enterprise. Workers and consumers in North and South Carolina benefit when products flow freely across our borders, and we’re better off for it. Tariffs are a step backward.
Yaël Ossowski is a Charlotte-area native, economic journalist and deputy director at Consumer Choice Center.