The price of tariffs
A few years back I was in Wisconsin reporting on the American economy where I met a potato farmer and wholesaler, who used dozens of huge machines to clean, sort and pack tons of potatoes a day.
He was furious about US tariffs on foreign steel, why?
Because every big piece of machinery he bought was made of steel and imported steel was not just more expensive, all steel was much more expensive. Domestic steel manufacturers just ramped their prices to the price of the new more expensive, taxed imports.
The steel companies loved the tariffs, but they are a relatively small part of the US economy and steel is used in dozens of other sectors, construction, transport, shipping, machinery and manufacturing to name just a few. Put up the price of steel and their prices increase too.
Now you have the prospect of Donald Trump becoming President and promising a 20% tariff on all imports and 60% on Chinese imports.
The consequences are well known and obvious, prices will soar as domestic producers fill their pockets. Choice will fall, inflation will rise, the economy will suffer and the rest of the world will feel the hit and quite possibly retaliate with their own tariffs.
We tried this in the 1920’s and 30‘s and it didn’t end well. Now the man who wants his generals to be like Hitler’s is likely to repeat the very mistakes of 100 years ago.
We should all be very worried.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
The one thing we learn from history … what is it with people pressing the auto-destruct button? Brexit, Truss, Trump etc
It’s one of the reasons these anarchocapitalist clowns hate the EU.
You don’t need unwieldy tariffs, you just need more exacting minimum standards.