By Owen Heimsoth | United States
Recently, tariffs have become pretty big in the news. Just yesterday, BMW announced measures to add production in China, likely a response to President Donald Trump’s tariffs on automobile products from the EU.
Donald Trump’s actions clearly oppose the values of free trade. Because of this, he is hurting our ability to grow cars in Iowa.
Yeah, that sounds weird, but let me use a popular argument relating to free trade that many economists use.
How to Grow a BMW
There are two ways in which we can produce cars. We can either manufacture them in Detroit or grow them in the Midwest.
The first plan of action is a well-known, huge part of our economy, but so is growing the automobiles. I’ll explain how the process works.
In late April, our farmers start planting their soybeans and watch them begin to grow. A few months later they begin to harvest their crops and put them on ships. Those ships float over the horizon to the east. We trade our soybeans with many countries throughout the world, and a couple months later, the ships come back with BMW’s on them.
This is how free trade works. It does not take an expert to see this; I reckon an eight-year-old may understand the benefits. We have soybeans. We want cars. The rest is history.
This would be simple, but Trump is doing his best to make it much, much harder.
In recent months, Trump has put tariffs on automobile imports from the EU. As a result, China has placed retaliatory tariffs on US soybeans. What has been the result?
The US can’t export their soybeans cheap to China, a huge manufacturer of automobiles. Also, EU tariffs have hurt automobile trades with the contingency.
Now, German automobile companies such as BMW are putting their factories in China and helping raise the price for automobile consumers in the US. This is also counterintuitive because we are failing to curb Chinese influence in the global market, something that Donald Trump aimed to do.
And now we can’t grow BMW’s in the Midwest.
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