Prices To The Tariff Circus Continue To Rise

In my article “Trade Tariffs – The Worst That Could Happen” this past December, I said the following:

“Tariffs are taxes imposed on imported goods, ostensibly to protect domestic industries or gain a competitive edge. They are usually recommended and promoted by those who think they have identified an “unfair advantage” existing between trade partners.

Trade tariffs harm small businesses and result in inefficient allocation of resources. Trade tariffs hinder productivity and economic growth; and, they can lead to trade wars. The end result is always higher costs for consumers. 

President-elect Trump’s suggestion that selectively placed super-high tariffs could replace the income tax is just plain stupid. The results and the mathematics are impossibly workable and the attempt would be disastrous for international trade and the world economy. Besides, a tax is still a tax.” 

I now say “the worst that could happen” is about to happen. By that, I am referring to the negative fallout from the global trade war that has started with a bang. That negative fallout includes similar counter moves by other nations, disruptions in the flow of goods and services, and higher prices for imported goods that are unnecessary and unwarranted. All of this will ruin international trade, further weaken the global economy, and result in recession or depression.

HOW BAD CAN IT GET?

“After passage of the Smoot-Hawley Tariff in 1930, America’s trade partners responded with their own tariffs. The results were historically horrible. Global trade fell by 65%, and the Great Depression worsened. Some say it contributed to the beginning of World War II.”  (See Trump’s Tariffs – Just More Bad News)

Not only is there a complete and total ignorance regarding primary economic fundamentals, but President Trump’s ego will make it more difficult for anyone involved to deal with the negative effects of his errant trade policy.