Are Tariffs Good?

By: J. McManus

​ 
The recent increase in tariffs for products imported by the US government has recently stirred up a lot of controversy, especially since other countries (aside from the US) are being affected due to the amount of products they export to the United States.
 
What are tariffs? Essentially, tariffs are taxes imposed on the value of imported goods. For example, when Brazil sells coffee beans to the US, a tax will be imposed on the value of the coffee beans being sold, such as 10%, and the value of that product will be 10% more expensive to import to the USA, causing an increase in prices of that product by roughly 10%. The aim behind these tariffs is to boost the American economy by ensuring that American products are bought more frequently in comparison to their foreign counterparts. When local products are favoured, jobs are protected and generated, theoretically boosting the economy. 
 
This concept was one of the leading arguments in the election campaign of the current US president, Donald Trump, who aimed to increase American production, instead of majorly importing foreign products. When this idea was proposed, there was a general feeling that the implications of such policies were not properly understood or disclosed.
 
The consequences of increasing such tariffs has led to many uncertainties in relation to global trade, including the pertinent questions: will the US actually impose such tariffs? At the start of this year, a set percentage of tariffs for each country was announced, yet very significant changes continue to be made since, including the high rates being temporarily reversed for 90 days (except for China which has an extraordinary tariff of 145%, with certain exemptions). Will other countries impose reciprocal tariffs? While China responded by imposing reciprocal tariffs, many other countries have vowed to do likewise though that simply has not been the case yet. Do these unilateral tariffs imposed by the US align with the World Trade Organisation (WTO) agreements? One of the key objectives of the WTO is to reduce tariffs to incentivise globalisation. Will the tariffs actually lead to a growth of investment and jobs in the US? Investments are normally made based on long-term predictions for a benefitting return, whereas the current volatile tariff negotiations generate much uncertainty, "scaring off" many investors which could lead to the US taking a hit in their economy. In several countries, American products have been labelled and blacklisted to locally retaliate against the opposing tariffs, not agreed upon internationally.
 
Although the initial decision to reduce imports was 'popular' among the majority of Americans, the resulting consequences have led to an upheaval of discontent and major backlash, both among foreigners and locals. The implementation of this initially 'popular' ideal has proven to transform the opinion of the public into a now 'unpopular' concept.