On Thursday the White House announced that they would be implementing tariffs on steel and aluminum imports from Canada, Mexico, and the European Union. We will explain why this is bad, but first we must call out the ridiculous hysteria relating to these tariffs, courtesy of our mainstream media. If all you watch is CNN, you probably think that we are on the brink of a “trade war” with the world’s largest economies. The truth is, the media are in full retard mode when it comes to Trump and his international trade policies. Also, these tariffs will hurt the U.S economy, here’s a summary of both issues:
- International Trade Produces Overall Benefits to the Parties Involved
When free, voluntary exchange can exist unabated, both parties come away with what they value most. The two parties engaging in trade expect to benefit in some way. In other words, international trade is free voluntary exchange between countries where both parties benefit from the exchange, and where imported goods are paid for by our exported goods. This is precisely why the media’s narrative of “OMG trade war” is a load of crap. The fear of economic retaliation is unlikely given the nature of trade. If in response to our tariffs Mexico decides to retaliate by imposing tariffs of their own, they will only further stymie their economy. Economic self-interest is what keeps a “trade war” from happening. The media’s talk of trade war is all narrative.. Don’t believe the hype.
- Tariffs Will Hurt American Export Industries
Trump’s decision to impose tariffs on imported metals is most likely a bargaining tactic to re-negotiate trade relationships within North America and between the United States and the European Union. Remember, imports are paid for by exports. Tariffs on imports will result in a decline in imported goods which will directly affect export industries in the United States. Overtime, export industries will experience a decline in production which will lead to job loss. There is no doubt about it, tariffs hurt both parties involved. If this is simply a negation tactic by the administration, it is an extreme one. If Trump gets his desired end then he comes out looking like an economic/political genius. However, the reality is that the one who bears all the risk in this bargaining scheme is the American worker.