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The reality behind Trump’s call for higher tariffs

Tracey Samuelson Jan 15, 2016
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The reality behind Trump’s call for higher tariffs

Tracey Samuelson Jan 15, 2016
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Sometimes, politicians’ economic proposals don’t quite line up economic reality.

Case in point, Republican candidate Donald Trump in Thursday’s GOP debate repeated an idea he’s often mentioned on the campaign trail: levying tariffs on goods from China, an idea he’s previously proposed for Mexican products as well.

Trump rebutted claims from an earlier New York Times article that quoted him arguing for a 45 percent tariff on Chinese goods, but he maintained tariffs were a good idea.

“I’m totally open to a tariff,” he said. “If they don’t treat us fairly, hey, their whole trade thing is tariffed. You can’t deal in China without tariff. They do it to us, we don’t it. It’s not fair trade.”

Indeed, the idea of taxing a foreign good, making it more expensive and therefore giving local industry a boost can sound very tempting. However, that’s simply not how tariffs work, said Susan Aaronson, a research professor at the Elliot School of International Affairs at George Washington University.

“He’s trying to sell potential voters a lot of snake oil,” she said.

Higher tariffs are often passed onto consumers, as some Republican candidates pointed out to Trump last night. Additionally, Aaronson said that kind of protectionism doesn’t help in the long run.

“Putting tariffs on Chinese products does nothing to train workers in how to be more productive, how to use new technologies to produce goods that people want around the world,” she said.

Since the 1930s, the U.S. has moved to lower its tariffs in exchange for similar cuts from other countries, Judith Goldstein said, a political science professor at Stanford University.

The average U.S. tariff is now around 3.5 percent.

“There’s so many reasons [raising tariffs are] not the right thing to do, I don’t know where to begin,” Goldstein said. “Almost immediately, there would be retaliation — legal retaliation.”

China could open a dispute at the World Trade Organization and ask for compensation.  

However, despite all economic evidence to the contrary, Goldstein said tariffs still have an emotional appeal.  

“If you’re a steelworker and you’re 55 years old, where are you supposed to go?” she said, noting government funding for retraining, through programs like Trade Adjustment Assistance, is often insufficient.

“You are going to do everything you can not to have to go through that kind of pain,” she said. 

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