Will Tariffs save America?

What are tariffs? Tariffs are taxes charged on imported goods from other countries, also known as import taxes. Historically, companies pass these on to the consumers by raising the prices of the products they sell. During the Trump campaign, Trump promised to raise tariffs on all countries, whether they were allies or not. Trump has felt that other countries have taken advantage of the U.S. by sending their goods to the U.S., and those countries are not buying the goods from the U.S. Trump first proposed a 25% tariff on Canadian and Mexican imported goods. Energy sources such as oil, natural gas and electricity will only get a lowered 10% tariff. This would have drastically raised prices as the U.S. biggest trade partners are Canada, Mexico and China. Trump then paused tariffs on Mexico and Canada for 30 days after an

 agreement to boost border security along the borders against drug trafficking and illegal immigration. Mexico will deploy 10,000 national guards along the U.S.-Mexico border, similar to what it did in 2019. Meanwhile, Canada will secure the U.S.-Canada border with the U.S. by launching a Canada-U.S. Joint Strike Force. 

China, the second largest economy, will get a 10% tariff on all imported goods on Feb. 4. Several states like California, Florida and Virginia import many goods from China, so they can expect their grocery prices to rise. China has retaliated by imposing a 10% tariff on U.S. coal and liquefied natural gas and 15% on crude oil. According to the BBC, “US imports account for just 1.7% of China’s total crude oil bought from abroad in 2023. This suggests China is not dependent on the US and so the impact of the tariffs on its economy could be minimal.” China has slapped a 10% tariff on agricultural machinery, pick-up trucks and large cars. American companies might find trouble overseas facing fines, sanctions and revoked work visas. China has said that it will investigate Google for monopolistic practices. Calvin Klein and Tommy Hilfiger have been added to an “unreliable entity” list and China has accused them of “discriminatory measures against Chinese enterprises.” China will also impose export control over 25 rare metals, tungsten being one of them and one of the aerospace industry’s most crucial materials. 

After the unveiling of Deepseek AI it led to a massive shake-up to the tech industry as it was not expected for China to have an AI model as good as ChatGPT, because the U.S. put a blockade that Taiwan couldn’t sell their most powerful GPU chips to China. Trump has said that to combat this problem, he is willing to impose up to 100% tariff on Taiwanese-manufactured chips, which would raise prices for Nvidia GPU and motor vehicles, phones and computers, as many of these things hold Taiwanese chips inside them. However, this remains to be seen. As far as we know it’s all talk. 

Trump still plans to announce tariffs against the European Union, which is a collection of 27 countries. The EU has said they are ready to retaliate, while some prime ministers like Mette Frederiksen say, “I will never support the idea of fighting allies. But of course, if the U.S. puts tough tariffs on Europe, we need a collective and robust response.” Tariffs against our allies could lead them into the arms of China and turn away from America, leading to China becoming ever closer to rivaling the U.S. as the world’s largest economy.

These tariffs aim to bring manufacturing jobs back into America and not rely so much on importing goods from other countries. However, things are not considered, such as whether these industries have an adequate workforce and ecosystem. We can look at the semiconductor chip business where Taiwan Semiconductor Manufacturing Company (TSMC), as part of the Biden CHIPS Act, brought semiconductor manufacturing back to American soil. Billions in grants were handed out to build factories in the U.S., yet TSMC found that the U.S. had lost the capability to run and even build such factories. For its $12 billion Arizona facility, TSMC has had to import thousands of workers from Taiwan to build and run the factory. Manufacturing isn’t just simple manual labor; it requires a particular type of specialized skill set and handling of more advanced technology than it was back in the 1960s. If the U.S. did it all by themselves without help from TSMC, they would have spent more time, most likely a few years, to build the facility and get the proper equipment in there to bring those jobs. Now imagine other industries like the clothing industry that are primarily established in places like China, Bangladesh, Vietnam and India. Is the federal government going to give out billions of dollars in grants, subsidize every industry and increase our $36.22 trillion national debt, so we can bring manufacturing back to America?