How To Hurt The U.S. Economy: Part 2.) Implement Tariffs
Tariffs hurt American consumers. When the United States implements a tariff on a foreign country from which the U.S. imports goods and services, it is American consumers who bear the cost of that tariff by paying a higher price for those goods and services.
Tariffs force Americans to pay higher prices for goods and services. If the United States levies a tariff on Country X, companies based inside of Country X will simply raise the price on various goods and services to protect their profit margins. American consumers pay a higher price for these goods and services as compared to the pre-tariff period. How is that a good thing for American consumers?
Tariffs hurt Americans, not the PRC. In the case of China, the PRC has been known to fix the value of the Yuan against the Dollar (China is unique in that respect). So, if the U.S. continues to pressure China with tariffs as has been the case under Presidents Trump and Biden, who is to say that China will not devalue the Yuan to offset the impact of tariffs? China could flood the U.S. with ultra-inexpensive goods if it so chose. When China takes Taiwan, it could play tough with TSMC and other exporters to the U.S. if it so chose. This does not mean that the U.S. should appease China, but tariffs are not the way to push back on China. Tariffs hurt Americans, not the PRC.
Tariffs are a form of price inflation and will only make American consumers poorer and the U.S. economy weaker. Look at the United States’ 2.9% savings rate. Look at what is happening with auto, home and credit card delinquencies. The American consumer is stretched and hurting more with each passing month.
If the Federal Government wished to permanently strengthen the U.S. economy it would:
Dramatically reduce fiscal spending - including entitlement spending. Take spending from $7 trillion to $3 or $4 trillion;
Reduce taxes for individuals and companies;
Reduce Federal regulation - allow the States to regulate companies as they see fit;
See #1.
