Nov 27, 2024
Donald Trump, who made tariffs one of the main planks of his successful campaign, has now concretized those threats in the form of a proposed 25% blanket tariff on Canada and Mexico, along with a potential 10% tariff on China. So, the incoming president pledges to launch his administration by raising costs for families. There’s the old adage that voters will never understand that the president can’t simply control gas or food prices or the broader economy; voters see that prices go up and they think the president is in the Oval Office personally pumping them. There are, however, a handful of actions that the executive can directly and immediately put upward pressure on prices, and tariffs is one of them. It’s not a complicated formula: tariffs on imports mean that these goods, parts and precursors are more expensive for domestic sellers to bring into the country, and these costs just get passed down to the consumers. This is true for cars, fruits, chemicals and everything in between. If you’re a grocery chain and you buy wholesale tomatoes from Mexico at 40 cents a pound, and now they’re 50 cents with the Trump tariff, then you’re charging every customer enough to make up that difference. Now think about that in the context of Mexico and Canada jointly accounting for nearly 90% of U.S. produce imports, along with a decent chunk of crude oil. Broad and incautious tariffs are, to put it mildly, considered an inadvisable economic and political endeavor for any president, and there’s hardly anything as broad and incautious as across-the-board tariffs against our neighbors, which are our two largest trading partners. It’s especially ironic for this to be one of the main and most immediate policies of an incoming president who won at least in part on anger over high consumer prices and often touts some sort of financial savvy. Trump’s vanguard has a lot of distractions and witticisms to deflect from this point, including the frequent allusion to the fact that the U.S. government once upon a time funded itself almost entirely via tariffs, in the era before income taxes. That’s all well and good, for a period when the federal government was basically just a modest army and small navy — and not one with equipment that each cost the equivalent of a mid-size city’s annual budget — and a series of post offices. You can’t run a modern U.S. federal bureaucracy on that, not to mention that modern trade is infinitely more complex and more integral to our daily lives than it was then. Very few Americans are today weaving their own clothing and growing their food. Will he actually do this? Trump has said that the tariffs would be in effect as a deterrent to illegal immigration and fentanyl, which is nonsensical. He intends to put them into effect along with other extremely inflationary policies like mass deportation (which is also cruel and un-American to boot). There will probably be some legal questions, including the basic one of whether the federal government even could unilaterally impose tariffs on countries with which it has existing trade agreements. But Trump is certainly going to try. Let his voters take note next time they look at their grocery bill.
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