Views on the News: Tariffs
President Donald Trump and Treasury Secretary Steven Mnuchin are preparing to impose $60 billion in annual tariffs against Chinese products, according to a . Supporters say that imposing tariffs will benefit American producers and curtail China’s growing economic influence, while detractors warn that tariffs could set off a trade war with China and destabilize global trade. Do you think the U.S. should impose these tariffs, and what effects could they have on the economy if implemented?
Prof. Daniel Bergstresser (IBS)
President Trump’s executive memorandum calling for tariffs on Chinese imports is bad policy. The new tilt toward thoughtless and ad hoc protectionism is at odds with the administration’s own Economic Report, which Trump signed just weeks ago. The president appears susceptible to sudden policy shifts. He also seems partial to country-specific and product-specific interventions instead of consistent policies motivated by sensible underlying principles. In any context an ad hoc approach like this could be destructive. But combined with the President’s failure to separate himself from his opaque and sprawling international business commitments, the results here are potentially catastrophic. We simply cannot be confident that Trump’s rapidly oscillating and conflict-prone trade policy is free of contamination from his family’s business interests. What is happening now will damage our standing and influence in the world for a long time.
Prof. Daniel Bergstresser (IBS) is an associate professor of finance at the International Business School, specializing in municipal finance and household financial behavior.
Prof. Michael Coiner (ECON)
In almost all circumstances tariffs result in net losses for both the nation imposing them and the targeted nation. If the U.S. imposes tariffs on China, U.S. consumers of Chinese goods will lose more than U.S. producers who compete with Chinese products will gain. (The recent tariffs on steel and aluminum stand to hurt U.S. firms that use those metals more than U.S. steel & aluminum producers gain.) If China retaliates, our losses will become larger as U.S. firms will see their sales to China drop. The only possible good outcome here is if the “threat” of U.S. tariffs leads to negotiation with China toward ending practices in that nation that “steal” technology created in other nations. But if we actually impose the tariffs, we lose.
Prof. Michael Coiner (ECON) is a professor of Economics, specializing in the economics of public education and the public sector.
Prof. George Hall (ECON)
The President has a responsibility to protect US intellectual property, and US manufacturers have legitimate concerns about China's trade practices. But the imposition of tariffs on China is a clumsy strategy for dealing with these issues. Given the complexity of multinational supply chains, it is hard to tell precisely who will bear the cost of these new tariffs; and if China chooses, it would not be hard for them to retaliate, leaving producers and consumers in both countries worse off. Hopefully leaders from both nations will pull back from this dangerous game of chicken and come to an agreement on intellectual property and other areas of disagreement, but I can't help but think that the President would be negotiating from a stronger position had he not pulled the US out of the 12 nation Trans-Pacific Partnership last year.
Prof. George Hall (ECON) is a professor at the International Business School and the Department of Economics, specializing in fiscal policy and industrial organization.
Sam Cohen ‘20
This decision by the Trump administration has the potential to have both negative economic and diplomatic repercussions. The President's decisions to increase duties on Chinese imports has the potential to hurt the very people he claims to be trying to help, such blue-collar workers in the automotive industry. By increasing tariffs on steel and aluminium (metals important for the production of cars) for example, Trump is essentially taking money out of the pockets of auto- workers by making cars more expensive.
In addition, by increasing tariffs on Chinese goods, Trump is increasing the likelihood of a trade war. A trade war with China, our largest trading partner behind the EU and the second largest economy in the world, would mean almost certain negative economic impacts for both China and the US. In this age of economic interdependence, such actions should be considered an anachronism.
Sam Cohen ‘20 is Vice President of Brandeis Quiz Bowl.