Over the first two months of his presidency, President Donald Trump has imposed import tariffs on Canada, Mexico and China, collectively accounting for 40% of all US imports. He has also threatened to impose tariffs on 10 other individual countries, as well as all European Union and BRICS (Brazil, Russia, India, China, South Africa) nations.
A tariff is a tax placed on imported or exported goods, paid by the company doing the trading.
Mr. Deal, the IB Economics teacher at Meridian, commented on the use of tariffs. “Generally speaking, by definition, a tariff will almost always make the cost of a good or service more expensive to the consumer, because you are adding a tax onto it,” he said“To some extent, producers will choose to eat that cost themselves, [but] that’s not common. Generally speaking, producers will pass along the cost of a tariff to the consumer.”
Trump claims that tariffs will improve American manufacturing and create domestic jobs due to it being economically disadvantageous to import goods from foreign countries. However, Jerome Powell, the chair of the Federal Reserve, has stated that tariffs will increase inflation, upping prices across the country.
Şebnem Kalemli-Özcan, a professor of economics at Brown University, has spoken out against tariffs. “Imposing tariffs on the goods the United States is buying is not going to benefit anybody in the United States,” she said in an Q&A session. “If you make most of our goods we consume much more expensive, that will likely make consumers decrease their spending, and then producers would decrease their investment and this will likely lead to a decline in jobs.”
In a Q&A session, Trump’s Secretary of Commerce Howard Lutnick said on March 11 that a recession would be “worth it” if it helped them achieve their policy agenda.
Students are more divided. “Maybe in a way [the tariffs will be] positive because it makes imports more expensive and boosts the national economy. I think [undocumented immigration and the drug trade are] definitely a real problem. I don’t definitely agree with it as a negotiation technique, but if it works, then I don’t know,” said sophomore Lukas Wansley.
“From what I heard, maybe it would make it a bit negative, because the other countries are countering with their own tariffs so overall everyone’s going to take a hit,” said sophomore Damon Beck.
Mexico has received tariffs of 10% on non-duty-free potassium-rich salts (potash), as well as tariffs of 25% on all other goods.
Canada has received tariffs of 10% on energy or energy resources, such as electricity, coal, solar panels, or wind turbines, as well as a 10% tariff on potash not entered as duty-free under the USMCA, a free trade agreement between the USA, Mexico, and Canada. It has also received a blanket 25% tariff on all other products.
China has received tariffs of 20% on all products. Trump has also imposed a blanket tariff of 25% on all aluminum and steel entering the USA, including that from allied nations.
He has accused all three countries of allowing migrants and drugs, specifically fentanyl, into the US. Canada is the source of only 0.2% of illegal fentanyl entering the country.
IB Economics teacher Mr. Deal assessed Trump’s use of tariffs for international diplomacy, “It could be that [Mexico and Canada] will in fact respond to the imposition of tariffs by saying ‘Oh, we’ve been doing this bad thing, we can correct this behavior and the tariffs will go down.’ That assumes that they’re actually not doing as much as they could do. If they are doing all that they can do, putting tariffs on them until they do better than they can do isn’t going to help.
