Trump’s Tariffs
So, if you have been anywhere near the news recently, then you have heard about the tariffs that Donald Trump has been throwing into our country. If you aren’t well informed on this subject, it’s easy to be very polar about this change. Whether you are saying, “well these don’t affect me” or “man, this is going to ruin our country.” you still may not know the entirety of the situation. I’m here to inform you all that you need to know about these tariffs and what they mean for our country.
A tariff is a tax that is put onto goods imported from another country. Foreign products are charged more to send their products to the country. This means that there will be more effort into making a product in the country that has the tariffs, or otherwise raising the prices to keep up with the cost. Supporters of tariffs will say that imposing tariffs promotes domestic production. Meaning that the country creating the tariff will use more products made in that country. Tariffs, in some cases, could lead to economic growth. Things made in the country will cost less to make, so they will cost less. However there is a possibility that there will be a massive inflation to what we perceive as expensive or cheap.
Some countries have an easier way of creating products, collecting resources for the products, or finding workers to create the products. This means that there are a lot of cases in which something being made in a country imposing tariffs would end up being a poorer quality, or more expensive to create. Tariffs back a country’s product creators into a corner, forcing them to either acquiesce and manufacture within the country or pay more to import. Which can lead to more expensive production, worse quality, or less quantity of the product.
97% of clothing sales, 66% of furniture sales, 99% of coffee sales, 50% of vehicle sales, etc. Were imported from other countries to the United States. We cannot compete with the other country’s conditions to keep these things at the price they are now. If they began to be made in the U.S., then they would end up being sold for more money due to different costs involved in making the products. This means that these companies most likely will not move their systems into America, meaning that the tariffs will affect them, meaning that prices will be raised on these products. It is a lose/lose situation. Tariffs WILL cause inflation.
Let’s give an example. Let’s say that currently, John is paying Poland 100 dollars to import his product to sell at his convenience store. John will sell this product for 150 dollars for a profit of 50 dollars. However, if Trump’s tariffs are enforced, John will pay 10% more to get that product over. This means he pays 110 dollars. If he sells it for the same amount, he will only be making a profit of 40 dollars. This is a 20% downgrade in profit. John has to raise his price to 165 for the same percent of profit. This will also happen to John’s friend, Jenn’s appliance store. Everything will begin to cost 10% more to keep up with profit. Trump tells us that Tariffs make foreign countries pay more, however it always ends up with us paying more.
Most likely, Trump will not impose tariffs on every single import, which is a beacon of light in a dark tunnel. Not EVERYTHING will be immediately affected by tariffs. However, just be cautious about the long term effects of inflation and shrinkflation.
