The part of import tariffs that all too many fail to understand is that it is consumers being “protected” by them who actually pay them. That is, import tariffs on foreign goods entering the United States are paid by those inside the United States. Or, as we can also put it, Trump’s tariffs are making Americans poorer. This isn’t a known to be desired effect of economic policy.
However, it’s important to note that the real burden doesn’t come from the rise in price of the imports. It’s what the domestic producers do to us all in the absence of that foreign competition which is important:
If you’re unfortunate enough to be shopping for a new washing machine, you can thank the Trump tariffs on imported washing machines, washing machine parts, steel and aluminum for the largest three-month price increase — 16.4% from February to May this year — in the 40-year history of the BLS series for Major Appliances: Laundry Equipment that started in January 1978 (see chart above). In the May CPI report (see Table 2), the one-month increase in the CPI for Laundry Equipment of 7.4% in May followed a 9.6% increase in April, and in both months was the largest monthly price increase of any of the 300 individual CPI categories or sub-categories. For the month of May, the 7.4% increase in the washing machine series was twice the increase of the next highest increase of 3.7% for educational books and supplies (mostly college textbooks).
What’s worse than this price rise is that this is planned. This is the desired outcome from the people who imposed these taxes.
As above though, the important effect isn’t that foreign washing machines, or their parts, are now more expensive. It’s that domestic producers are now free of that competition – at low prices at least – from those foreign producers. What happens when a producer can raise prices? Well, they’re capitalists, right? Trying to make the maximal profit they can – gouge consumers as best they can. It’s competition which stops or ameliorates that. Remove some of the competition and thus domestic producers can, so they do, raise prices. Anyone doubting this should just look at recent within the US prices of steel.
Again, note that this isn’t some defect with the plan, it’s the point of it. Domestic producers weren’t making enough money. So, limit that foreign competition so they can raise prices. Who gets to pay this? That’s right, domestic consumers do.
As I’ve said before, a protectionist is someone who argues you should be poorer so they can be richer. This is exactly what is happening here, tariffs are being imposed so that domestic consumers can be forced to pay more to domestic producers. The only question being, well, why do we listen to these people? For they’re trying to do the same to hundreds of billions of dollars worth of more imports, aren’t they? The cost to us consumers of which will be?