Economic Policy

Trade, Tariffs, and Turmoil

Tariffs and trade have been at the forefront of politics around the world given U.S. President Donald Trump's ongoing dispute with China. Emily Mikes examines the turmoil that has ensued domestically and internationally.

BY: EMILY MIKES

The impact of President Donald Trump’s tariffs is once again front and center with the recent announcement in the Chicago Tribune that an Illinois company is shutting down two of its factories and moving operations to Mexico. Stack-On Products plans to close its factories in Wauconda and McHenry, Illinois by October 12th of this year, which will result in a collective 153 workers losing their jobs. The decision to move the operations to Mexico was made about two months ago, after Trump imposed a 10% tariff on aluminum and a 25% tariff on steel from China, among other goods. With such a massive price increase for major trading commodities –  from main trading partners as well as economic competitors – companies like Stack-On Products have few options to offset the costs, none of which will serve to benefit the economy. The most drastic measures including a reduction of the American-based work force and moving the jobs to another country. While companies like Stack-On Products and Harley-Davidson are moving operations to other countries, firms including Mid-Continent Nail and REC Silicon are seeing a drastic decline in production capacity that could result in the companies closing their doors for good.

It’s important to note that the tariffs are not only impacting factory workers, but also the United States’ foreign relations. The tariffs are not just an indication of the overarching retaliatory nature of a trade war, but rather indicative of deteriorating relations with some of the United States’ closest allies. Moreover, retaliatory tariffs implanted by the European Union, China, and a host of other countries in response to President Trump’s tariffs stymied overseas agricultural sales from the United States, affecting the agricultural sector equally. Just last month, the Trump administration issued a statement saying that farmers and ranchers impacted by the tariffs would receive an additional $12 billion in aid. The program would include direct payments to farmers and other efforts aimed at compensating farmers for their losses as a result of the trade war. However, if the trade war with China continues, the $12 billion bailout will likely not be enough to help the impacted farmers. Han Jun, a top Chinese agricultural official, has been quoted saying that the “impact on China is very limited due to China’s multiple import resources,” and warns that “[o]nce other countries have become reliable suppliers of agricultural goods…it will be very difficult for U.S. agricultural producers to regain the Chinese market.” The U.S. is continuing to roll out their tariffs with another 10% tariff on close to $16 billion worth Chinese products. Simultaneously, close to 400 companies, trade groups and other are testifying before the U.S. trade representatives on the negative impact the tariffs have had.

While President Trump is still standing by his statement that “Tariffs are the greatest!” members of the GOP do not seem to share his sentiment. Paul Ryan and Mitch McConnell have criticized the tariffs saying that there are “better ways to help American workers,” and that the “tariffs will not be good for the economy.” The tariffs are also threatening to impact key Senate races in several states including Missouri, North Dakota, and Indiana with the control of the Senate potentially hanging in the balance. As it stands, the tariffs have not had their desired effect. On the contrary, rather than bringing China to its proverbial knees, the growth within the United States has been hampered as the livelihoods of the agricultural and industrial sectors hangs by a thread. Global economists have argued for free trade time and time again, citing historical trends of tariff barriers leading to economic downturns. While the U.S. economy continues to be strong through other sectors, it is important to not ignore the woes of the sectors that are bearing the brunt of the trade war. In their current iteration, the tariff barriers imposed by the United States are costing its own citizens dearly, leading to what will only be further turmoil.


Emily Mikes is an associate at Squire Patton Boggs. She received her J.D. from Cleveland State University’s Marshall College of Law and Bachelor of Arts in Psychology from Miami University. 

Photo Credit: Kiplinger

Please note that opinions expressed in this article are solely those of our contributors, not of Political Insights, which takes no institutional positions.

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