How will people handle a 10% increase on all Chinese goods (initially just $200 bn of them)? Will they run screaming from Walmart crying for armed rebellion? … or maybe they won’t notice that a shirt at TJ Max went up from $13.50 to $14.75?
Catherine Rampell (WashPo Oped writer) thinks this is a travesty as though we (Trump et al) have sinned against the one true American creed – consumerism. Why is it so hard to accept the idea that paying a higher price for some things can be in the national interest? It makes sense to have tariffs against trade criminals and to protect jobs even if it’s at the expense of the consumer.
My guess is that this 10% price increase will be a giant non-event. Economists may whine but people won’t get too exercised. The question is -will this experiment in domestic preference sustain itself through the next administration. It seems clear to me that since Trump raised the issue of Chinese trade crime many non-Trumpsters have recognized the validity of the case. Now they must deal with one of the appropriate ways to counteract it. If you’re against their subsidization of exports and IP theft then what would you recommend? You no longer get to whine about the inefficiency of tariffs without proposing an alternative.
We could set up a rebate for the poor or increase food stamps. We could/should exclude non-essential consumer items that will never be made in the US no matter how much of a tariff we apply – Haloween masks and cheap plastic toys. I’m after things like LCD screens for airplanes and antibiotics. I’d like to know that such things were procurable in the US in case our giant parasite gets testy.
In the long run, production adjustments will happen; prices will do their job but if the market thinks this is just a temporary Trump-only policy then nothing will be achieved. It’s true – a rollback will come along with a smug proclamation of how tariffs never work but If the reaction to the tariffs is diminimus then it makes it easier to leave them intact. It would also help if the tariffs came with a guarantee that the revenue was used to pay down the national debt and increase food stamps.
Then retracting them would be almost impossible.