The Jambar
Starting Feb. 1, President Donald Trump began imposing a series of tariffs on various nations, with hopes of strengthening domestic production. This began with 25% tariffs on aluminum and steel from foreign countries. In less than one month, these tariffs were raised drastically. Many wonder what the outcomes of these tariffs are and what they mean for the average American.
After proclaiming April 2 as “Liberation Day,” Trump signed an executive order imposing tariffs on several nations, with Cambodia receiving a 49% tariff whilst the United Kingdom and Ukraine faced only 10%. This day of liberation soon turned to panic as the global stock markets rapidly began to tank.
According to an article by CNBC, within 48 hours of Liberation Day the Dow Jones industrial average lost over 4,000 points, the NASDAQ dropped 962 points and it wasn’t until April 9, when Trump suspended the tariffs for 90 days, that the market began to gain traction again.
Tariffs are especially topical and tend to have a troubling history within American politics. Former presidents such as George Washgton, Abraham Lincoln, William McKinley and Theodore Roosevelt placed tariffs on nations historically, some of these tariffs had negative outcomes.
During the Great Depression, former President Herbert Hoover signed off on the Smoot-Hawley Tariff Act of 1930, which was created to bolster American production and create manufacturing jobs. However, this instead sank the country deeper into its economic crisis when these nations enacted retaliatory tariffs.
Hoover’s scenario is no different from modern times. With Trump’s tariff policies in place, many countries have refused to give in and placed strong retaliatory tariffs on American products — most notably China.
Trump initially imposed a 54% tariff on all Chinese products April 7. However, when he suspended all other foreign tariffs, he increased China’s to 145%. In return, China increased its initial 34% tariff to 84%, before finally settling on 125% April 12.
Many believe this trade war will only affect the countries being tariffed, however, it is the opposite. Rather than the producer paying the tariff, the cost can be redirected onto products based on the producer’s discretion, which is ultimately paid for by the consumers.
Americans will face rising costs with foreign tariffs in effect. Everyday items such as cars, cell phones and computers are generally imported or made with parts from foreign countries — including China. The rising tariffs will result in cost increases for every consumer.
The ultimate goal of these tariffs is unclear. While Trump has claimed they are to revitalize American manufacturing, he also stated that he wants to stop illegal narcotics from entering the country.
With the trade war in full effect, there is a growing uncertainty over the outcome. The Anderson Economic Group estimated that a car produced with imported products could rise from $2,500 to $20,000, depending on the brand and model.
While the trade war is likely to continue for the foreseeable future, many Americans are preparing themselves for a possible recession. Though facing an economic recession is not enjoyable, it is ultimately the result of choice.