Tariffs and their Implications on the U. S. Economy

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Tariffs and their Implications on the U. S. Economy

In the article, “Tariffs Start to ripple their Way through the U. S. Economy,” Zumbrun argues that the recent tariffs implemented by the Trump administration may have adverse consequences on the country’s Gross Domestic Product (GDP) and wages. However, the proposed effects are hardly noticeable as exemplified by the impact of smaller tariffs on costs, especially for consumers. The application of widespread levies on products such as washing machines may pose significant repercussions in the long-term for consumers and increase pressure for local manufacturers. The article also notes that the expansion of the tariffs may lead to the erosion of the workforce. Taxes imposed on Chinese imports as well as steel and aluminum products expose the labor sector to the loss of nearly 145000 workers at the conclusion of 2019 (Zumbrun). Despite such limitations, the expansion of the labor market and the execution of tax-cuts secure the economy’s current position.

Tariffs may serve as a good strategy for amplifying the revenue for the country. In this strategy, the levies are a bad idea due to the effects that they will impose on the economy in the long-term. Increased tariffs on imports lead to price increments. The basis is that local producers are likely to enhance raw material prices to cater to the lack of access to cheaper imports. For example, the recent charges on steel and aluminum products have initiated the most significant cost increase over three months (Zumbrun). It is also essential to consider the effect of tariffs on the relationship between the U.S. and China as far as both markets are concerned. Since the levies decrease the profit that the exporting country attains via its imports, the latter will also impose higher tariffs for the same objective. In this respect, China may increase its rates for products supplied by the American market, hence raising the prices of the respective commodities locally and enhancing the rate of inflation.

Work Cited

Zumbrun, Josh. “Tariffs Start to Ripple their Way through the U. S. Economy.” The Wall Street Journal, 19 Jun. 2018. https://www.wsj.com/articles/tariffs-start-to-ripple-their-way-through-the-u-s-economy-1529400600. Accessed 25 Aug. 2018.