There is a bipartisan zeal for policies that misallocate capital and raise prices.
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The phrase “tariffs are for losers” is increasingly becoming a popular idiom within the international trading community. A tariff is a kind of tax imposed by one country on imported goods entering their borders from another country; effectively making them more expensive for the domestic consumer. But it has been shown on numerous occasions that tariffs are essentially oppressive measures taken to discourage a certain party’s interests, typically with unintended consequences.
In economic terms, a tariff is an attempt to artificially increase the price of goods being imported by country A into country B. Tariffs would potentially act to benefit the domestic producers of country B, as foreign producers would no longer be able to undercut their prices and the populace of country B could be expected to purchase their own country’s goods instead. In reality, tariffs foster destructive protectionism between countries, as countries retaliate against one another by matching imposed tariffs; a phenomenon which just leads to a spiral into a trade war.
International bodies such as the WTO have genesissed that tariffs lead to economic inefficiency, driving up prices for both countries and ultimately hurting consumers’ pocketbooks, as well as resulting in a raft of adverse economic impacts including higher inflation, wealth inequality, and dampening of foreign direct investment.
The current global trading environment is already a complex and somewhat hostile environment. The introduction of tariffs in the modern day can add to and intensify these adversarial circumstances, making it more challenging for a business to enter a foreign market or to remain competitive. The fact remains that those who impose tariffs ultimately end up losing out the most, in terms of both the gross domestic product (GDP) of the nation as a whole, and in terms of the impact on the citizens of the country.
The notion of “tariffs are for losers” encapsulates the deleterious effects of utilizing tariffs to protect domestic economies. Even though politicians might be tempted to impose tariffs, the fact remains that such a stance will ultimately lose out to the international community. Global free trade is ultimately what will benefit us all, and the use of tariffs only damages our collective chances of advancing our respective economies into a prosperous and interconnected future.
