October 28, 2024 Former President Donald Trump has upped the ante in his campaign for the presidential election to be held soon. One of his promises is that he will impose tariffs from 10% to 60% on imported goods, especially from China. Such a promise has made many American businesses worried. Alan Chadwick from Wyoming has been importing clothing from China for nearly 35 years to sell to stores catering to “working cowboys” in the U.S. Now, he is reviewing his business plan, intimidated by the potential severity of these tariffs on his operations.
Chadwick, who runs Wyoming Traders and has 16 employees, is thinking about moving his manufacturing to India or Pakistan, or even packing up altogether. Tariffs are “a tax on the American people,” Chadwick said, noting the outrageous costs involved in moving manufacturing back to the U.S. He said he would still vote for Trump, citing illegal immigration and abortion as issues more important to him than the impact of tariffs on his business.
The push by Trump for tariffs marks a turn in American politics toward less free trade, trying to protect U.S. companies from foreign competition. In his first term, Trump imposed tariffs on thousands of Chinese goods, which the Biden administration has largely continued. The Trump campaign touts its tariffs as a way to boost United States manufacturing and jobs, while most economists have cautioned that such policies will increase the cost to the consumer and do not in fact create employment significantly.
According to the Tax Foundation, the new tariffs would most likely reduce the U.S. GDP by 0.8%, eradicating approximately 684,000 jobs in the U.S. In general, the total household expenses could increase by at least $1,700 as per the estimates based on analysis by Peterson Institute for International Economics.
There seem to be some apparently positive voter opinion for the plans by Trump over tariffs. A recently conducted Reuters/Ipsos poll showed that 56% of likely voters are in favor of the proposals of the Republicans over tariffs. The supporters add that such measures address frustrations over globalization and the loss of jobs.
Democratic presidential nominee Kamala Harris has criticized the Trump tariff policy, which she terms a “national sales tax” and should be more targeted. And President Biden, on his part, has maintained most of Trump’s tariffs while embracing other protectionist measures to boost American manufacturing in areas such as semiconductors and renewable energy.
The sentiment in Washington seems to be that tariffs and curbs on foreign investment are here to stay for a long time, at least. Said Michael Froman, once a U.S. trade representative: ” The enthusiasm for reducing trade barriers has diminished significantly.”.
Other examples of the negative impacts of tariffs include those companies such as Jasco, an Oklahoma lighting and electronics company. Higher tariffs for Jasco since 2019 led the company to make an expensive move from its Chinese manufacturing base to countries in Southeast Asia, whereby revenues fell by 25% and the company also cut its workforce significantly.
While Lucerne International, a car parts supplier based in Michigan, plans to build a factory there by 2026, the company’s CEO Mary Buchzeiger shied away from considering tariffs an effective long-term answer since Buchzeiger believes that, long term, tariffs will only have the effect of making America less competitive in the global market.
The implications of Trump’s tariff proposals are highly disputable on the broader American business and the economy, despite the fact that it does attract certain voter groups. Deep divisions run in the debate of trade policy and how the future American industry is likely to look.