Tariffs, tariffs everywhere, and not for any good reason. President Trump really wants to support domestic manufacture and services, which is a respectable goal, but the current strategy is one of macroeconomic ignorance. If Trump wants to help Boeing, he can subsidise them with as many taxpayer dollars as he desires. However, he does know this won't hurt EU corporations like Airbus as much as a tariff, but what seems to be lost is the fact that economics is not a zero-sum game. Those hurt most by these tariffs are the consumers that the President has been also promising to protect. You can't do both at the same time, Mr. President. Remove the tariffs and focus on making US products of higher quality and of cheaper price, and we will thrive. All that tariffs do is reduce economic growth, which is why we are now stagnating. Not ideal.
Outside of what you talked about with tariffs, protectionist trade policies ultimately make imports lower. This means net exports would be higher. This would shift net exports to the right. For any real exchange rate protectionist policies raise the demand for net exports and raise the exchange rate, but leave net exports unchanged. The hope was to keep the exchange rate the same and have NX increase, however that is not what is achieved.
ReplyDeleteI agree with you. Although the idea to support local businesses is a good one, the way Trump is going about it has been damaging for the entire global economy. The U.S. just lost its top spot from the 2019 Global Competitiveness Report with Singapore now in the lead. With the trade war with China it's no surprise that the cost of these tariffs are much higher than the benefits to support domestic manufacturing. Clearly he has his own agenda in mind, which is far from looking out for the American people.
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