The trade wars over tariffs against
Mexico, Canada, the European Union and Chine are beginning to heat up as those
countries promise to retaliate against Trump’s tariffs.
“Are tariffs wise policy?
“Most economists
— Trump’s trade adviser Peter Navarro is a notable exception — say no. The
tariffs drive up the cost of imports. And by reducing competitive pressure,
they give U.S. producers leeway to raise their prices, too. That’s good for
those producers — but bad for almost everyone else.
Rising costs
especially hurt consumers and companies that rely on imported components. Some
U.S. companies that buy steel are complaining that Trump’s tariffs put them at
a competitive disadvantage. Their foreign rivals can buy steel more cheaply and
offer their products at lower prices.
In 2002, the
administration of President George W. Bush slapped tariffs on imported steel. A
study financed by steel-consuming businesses found that the tariffs cost
200,000 American jobs in 2002.
More broadly,
economists say trade restrictions make the economy less efficient. Facing less
competition from abroad, domestic companies lose the incentive to increase
efficiency or to focus on what they do best.”
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