By MARSHA MERCER
How or when President Donald Trump’s trade war will
end is anyone’s guess. There’s no long-term plan or end game in sight.
But two things are clear: You’ll pay more and Trump will
claim he won.
Despite what you’ve heard, China is not paying for the
tariffs any more than Mexico is paying for the border wall.
“We find that the U.S. tariffs were almost completely
passed through into U.S. domestic prices, so that the entire incidence of the
tariffs fell on domestic consumers and importers,” three economists wrote in a
report on the impact last year of Trump’s tariffs. They are Mary Amiti at the
Federal Reserve Bank of New York, Stephen Redding at Princeton and David
Weinstein at Columbia.
Trump imposed tariffs on nearly $283 billion in
imports last year – about 12 percent of total imports – and foreign countries
retaliated with tariffs of their own on American goods amounting to $121
billion.
By the end of the year, tariffs reduced U.S. income by
$1.4 billion per month, the economists calculated.
Trump says consumers can buy American to avoid tariffs,
but that’s easier said than done in our global economy.
Besides, “We also find
that U.S. producers responded to reduced import competition by raising their
prices,” the report said.
A tariff is basically a tax at the border that’s paid
by the importer, usually an American firm. Businesses may try to absorb the
costs for a while, but eventually they pass them on to the consumer.
Even Trump’s top economics adviser, Larry Kudlow,
conceded on “Fox News Sunday” that American consumers and businesses are paying
the tariffs.
Trump says the world has been ripping off America too
long. He insists tariffs bring back industries, like steel, and create jobs -- but
the cost is astounding.
The steel tariffs Trump imposed last year created
about 8,700 jobs in the U.S steel industry, according to calculations by the
Peterson Institute for International Economics. But the price tag for American consumers
and businesses for each job created or saved was more than $900,000.
“Wow!” the report said.
Trump has told allies and advisers the trade war is very
popular with his base and will help him win re-election, The Washington Post
reported.
“You want to know something? We always win,” Trump
said on the White House lawn this week.
Well, let’s hope so. The
last time the United States fell hard for tariffs was the 1930s, when tariffs
probably worsened the Depression.
But Trump loves tariffs. After
trade talks with China fell apart, he hiked tariffs from 10 percent to 25
percent on $200 billion worth of Chinese goods last Friday. China announced retaliatory
tariffs of $60 billion on U.S. goods.
Trump wants to impose
tariffs on another $300 billion of Chinese products, and he’s eyeing tariffs on
autos from Europe and Japan.
Everyone agrees China should stop its aggressively
unfair business practices -- like making American companies share technology
and trade secrets. The question is whether tariffs are the right tool.
While the economy remains strong, the trade war is
hurting the nation’s farmers who rely on overseas markets for soybeans. That’s
opened a rift between the president and some Republicans in Congress.
Senate Finance Committee Chairman Chuck Grassley, an
Iowa Republican and a lifelong farmer, complained he can’t through to Trump on
the need to lift tariffs.
Trump gave farmers a $12 billion bailout last year and
is planning another for $15 billion.
“Our great Patriot Farmers will be one of the biggest beneficiaries
of what is happening now,” he tweeted.
But Sen. Patrick Toomey, Republican of Pennsylvania,
isn’t buying.
“Think about what we’re doing. We’re inviting
retaliation that denies our farmers, the most productive farmers on the planet,
the opportunity to sell their products overseas and then we say, `Don’t worry,
we’ll have taxpayers send you some checks and make it OK,’” Toomey said.
Consumers can expect to see higher prices of Chinese
goods by mid-June, experts say. Items affected include auto parts, bicycles,
dog leashes, fish and seafood, furniture and luggage.
So grab your wallet. You’re likely to suffer
collateral damage in the trade war.
©2019 Marsha Mercer. All rights reserved.
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