Nov 19, 2018

The Vicious Cycle of Tariffs

Post by Freedom Partners

The Trump administration’s tariffs were imposed, in part, to cut down on foreign trade malpractice — like the state-subsidization of Chinese industries. Instead, they can contribute to this very problem, while inflicting economic harm on families and entrepreneurs.

Here’s how:

  1. We impose tariffs on imported goods from China.
  2. China retaliates with tariffs that limit the export of U.S. goods to China.
  3. These tariffs hurt our country’s businesses – farmers included.
  4. Taxpayers fund assistance to farmers hurt by tariffs.
  5. To pay for this aid, we borrow money from the Chinese.
  6. Some of that aid money goes straight to Chinese-owned companies located in the U.S.

In other words, we pay our farmers not to sell their produce to China using money borrowed from China — which can end up going to Chinese businesses, anyway.

The simpler — and more effective — solution to our trade disagreements is to pursue a zero-tariff environment. Free trade helps both American businesses succeed and consumers to purchase a wide array of goods at lower prices.

Through tariffs, we ensure that a few well-connected businesses succeed at the expense of most others, while consumers can expect fewer goods — and higher prices for them.

Free trade avoids those pitfalls. It’s time we drop our tariffs.