Donald Trump’s aim with his import tariffs is to try and insist that less is made and manufactured outside the United States and then consumed within it. This is because he and his trade adviser, Peter Navarro, are in the grips of the delusion that balanced trade matters. Even, the absurdity that exports are the point of trade rather than it being the imports which make us richer. Their particular ire is aimed at China which makes all sorts of things which Americans want to buy.
Which is odd, because consumers getting what consumers want is rather the point of our having an economy in the first place. Quite why we need to disrupt one of the largest and most efficient methods ever of achieving this goal is hard to understand. Still, that’s Trump’s thing and it doesn’t work:
GoPro announced on Monday that it plans to move “most of its US-bound camera production” out of China by summer 2019 as a result of the ongoing trade war between the two countries. The action camera company didn’t say specifically where it will move that slice of its overall manufacturing efforts.
So, we’ve specific tariffs against things made in China and bound for the US. So, fewer things will be made in China to go to the US. Given, as above, that Americans rather like those things being made in China for them it’s difficult to see that this is an advance in human wealth. Denying people what they want not normally being thought of as such an increase.
“Today’s geopolitical business environment requires agility, and we’re proactively addressing tariff concerns by moving most of our US-bound camera production out of China,” said Brian McGee, GoPro’s chief financial officer. “We believe this diversified approach to production can benefit our business regardless of tariff implications.” GoPro said it hoped to complete the transition by summer 2019. The changes will only affect cameras produced for the US market, so devices intended for sale in other parts of the world will remain in China.
The one place we know production isn’t going to shift to is the US of course. Really, that’s just not going to happen.
So, what’s the end result here? As a result of the tariffs the US trade deficit will rise. No, really, it will.
Look at what GoPro is saying. Everyone else will still get China made cameras. OK, obviously enough, that’s the cheapest place to make them then. US bound cameras will be made elsewhere at higher cost. They’ll still go to the US of course, but at a higher trade price. Thus the deficit rises.
Seriously, these sorts of tariffs, as imposed by Donald Trump, just don’t work. They don’t even achieve their stated aim, however much that particular aim is a spectacularly silly one.