Donald Trump’s tariffs: a world of hurt

Donald Trump has been talking a lot about tariffs lately, especially when used as an attempt to dominate other nations.

Trump’s tariffs implemented during his first presidency (2017–2021) were designed to protect U.S. industries and reduce trade deficits. How did that work out? Short answer, it didn’t.

Tariffs – taxes on imported goods – can have complex and far-reaching effects. While they aim to benefit certain domestic industries, they often hurt other groups.

Here’s a breakdown of who might be most affected (hurt) by Trump’s threatened tariffs during his second presidency:

U.S. Consumers

Higher Prices: Tariffs on imported goods (such ans electronics, clothing, and household items) often lead to higher prices for consumers, as companies pass on the added costs.

Reduced Choices: Tariffs can limit the availability of certain imported products, reducing consumer choice.

U.S. Farmers

Retaliatory Tariffs: Countries affected by U.S. tariffs, such as China, often retaliate with tariffs of their own. For example, China imposed tariffs on U.S. agricultural products like soybeans, pork, and dairy, hurting American farmers who rely on exports.

Loss of Markets: Farmers face reduced demand for their products in key international markets, leading to financial strain.

U.S. Manufacturers

Increased Costs: Manufacturers that rely on imported materials (such as steel, aluminum, and electronics) face higher production costs due to tariffs on these inputs.

Competitiveness: Higher costs can make U.S.-made goods less competitive in global markets, potentially reducing exports.

Small and Medium-Sized Businesses

Supply Chain Disruptions: SMBs that depend on imported goods or components often lack the resources to absorb higher costs, leading to reduced profit margins or increased prices for customers.

Uncertainty: Tariffs create uncertainty in the market, making it harder for small businesses to plan and invest.

Global Supply Chains

Disruptions: Tariffs can disrupt global supply chains, affecting businesses and economies worldwide. For example, tariffs on Chinese goods impacted companies in other countries that rely on Chinese components.

Trade Wars: Escalating tariffs can lead to trade wars, which harm global economic growth and stability.

Low-Income Households

Disproportionate Impact: Tariffs on everyday goods (such as clothing, electronics, and appliances) disproportionately affect low-income households, which spend a larger share of their income on these items.

U.S. Exporters

Reduced Demand: Retaliatory tariffs by other countries can reduce demand for U.S. exports, hurting industries like agriculture, automotive, and technology.

Competitive Disadvantage: U.S. exporters may lose market share to competitors in countries not subject to tariffs.

Workers in Affected Industries

Job Losses: Industries hit by retaliatory tariffs (such as agriculture, manufacturing) may face layoffs or reduced hours for workers.

Uncertainty: Workers in industries reliant on global trade may face job insecurity due to market volatility.

Global Economies

Slowed Growth: Tariffs can slow global economic growth by reducing trade volumes and increasing costs for businesses and consumers worldwide.

Developing Countries: Developing economies that rely on exports to the U.S. or China may be particularly vulnerable to the effects of tariffs.

U.S. Allies and Trading Partners

Strained Relationships: Tariffs can strain diplomatic and economic relationships with U.S. allies and trading partners, leading to broader geopolitical tensions.

The Obvious Conclusion

Did you notice a pattern here? Did you notice who the biggest losers are likely to be?

In a different universe “tariffs aim to protect domestic industries and jobs”. In the real world they often have unintended consequences that hurt various groups, including consumers, farmers, manufacturers, and workers. And most of them are in the U.S.

The broader economic impact of tariffs can also lead to reduced global trade, slower economic growth, and strained international relations. Trump, if he is prepared to, would need to carefully weigh the benefits and costs of tariffs to minimise harm and promote sustainable economic growth. But I’m guessing he won’t.

I wonder if anybody else supports Trump’s heavy-handed approach to threats of tariffs. Oh wait. Someone does, sort of, but he had a change of heart.

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