The Trump administration has been a huge advocate for tariffs. Recently, the administration increased them on Chinese imports. The administration has also removed India from special trade status. This means Indian imports will be subject to billions of dollars in tariffs. The president further threatened to levy tariffs against Mexico if the government does not do more to stop the influx of migrants crossing into the U.S. illegally. But China and Mexico are the #1 and #3 importers to the U.S., respectively. Trump, with his trade war, will raise prices for the average consumer.
India was a part of the Generalized System of Preferences, a program that helped developing countries export goods to the U.S. by exempting them from tariffs. However, the administration has decided that India has not provided the same access to their markets for U.S. exporters. In response, India has said they plan to impose tariffs on American goods, too. This will increase the barrier to the Indian market for U.S. exporters, although the Indian government has balked on imposing them.
In an effort to open up access to Indian markets the administration has created a larger barrier to them. This seems to be a trend. When the U.S. levied tariffs against China, China announced retaliatory tariffs. Now India has done the same. Tariffs as a bargaining tool seem to only bring more tariffs, more barriers to free trade.
Potential Mexican Tariffs
The administration has said that Mexico has until June 10 to find a solution to the increased influx of illegal border crossings or face a 5% tariff on Mexican imports to the U.S. It will increase to 25% by October 1. The president feels that there are things Mexico could be doing to stem the tide of migrants, but has failed to do so. This has brought Mexican officials to the negotiating table but, once again, Mexico has promised to retaliate, starting their own trade war against America.
Mexican officials have said that U.S.-imposed tariffs could cause much more harm than the administration realizes. The instability caused by reduced profits for Mexican exporters could prevent Mexico from being able to combat the immigration problem in the first place. Thus, it seems that the tariffs could actually exacerbate the problem on the Southern border. Once again, the president has used tariffs to combat an issue, but they have failed to resolve it.
Fair Deal or Senseless Trade War?
The common consensus with supporters of the president is that these tariffs are only going to be in place so long as the U.S. is not getting a fair deal. But this is clearly a detrimental way of looking at global markets, and a trade war is not the answer. First, the administration is using American consumers as collateral damage. The president is supposed to be a deal maker but, so far, he has only succeeded in harming the U.S. consumer with his strategies.
Second, what if these countries find ways to mitigate or offset the price of these tariffs? China, India, and Mexico have all promised tariffs on foreign goods. I hope the president can make his deal with China, India, and Mexico soon so that American consumers do not lose out on the opportunities a free market brings. From there, the U.S. must foster better relationships with its trade partners so that the American consumer can finally begin reaping the benefits of free trade.
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