{"id":13113,"date":"2018-08-03T05:05:02","date_gmt":"2018-08-03T05:05:02","guid":{"rendered":"http:\/\/www.lifeandnews.com\/articles\/?p=13113"},"modified":"2018-08-04T05:07:25","modified_gmt":"2018-08-04T05:07:25","slug":"how-trumps-trade-war-affects-working-class-americans","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/how-trumps-trade-war-affects-working-class-americans\/","title":{"rendered":"How Trump’s trade war affects working-class Americans"},"content":{"rendered":"

Jeffrey Kucik<\/a>, University of Arizona<\/a><\/em><\/span><\/p>\n

President Donald Trump justifies tariffs<\/a> on imports by arguing that \u201cunfair trade policies\u201d have harmed American workers. This has led to a trade war in which the U.S. and China have placed tit-for-tat tariffs on each other\u2019s products.<\/p>\n

Most recently, China said<\/a> it\u2019s ready to slap tariffs on US$60 billion in U.S. imports if Trump goes ahead with his threat to tax another $200 billion of Chinese goods. <\/p>\n

Since the president claims to be acting on behalf of working-class Americans, it\u2019s fair to ask: How do tariffs actually affect them? <\/p>\n

Scholars of international political economy, such as myself<\/a>, recognize that trade hasn\u2019t always been good for poorer Americans. However, the economic fundamentals are clear: Tariffs make things worse. <\/p>\n

\n \"\"
\n American auto workers demonstrate against trade tariffs they say will negatively affect U.S. auto manufacturing.<\/span>
\n AP Photo\/J. Scott Applewhite<\/a><\/span>
\n <\/figcaption><\/figure>\n

Free trade and tariffs<\/h2>\n

The erosion of American manufacturing became a hot-button issue during the 2016 election. And for good reason. Total employment in manufacturing has fallen by 25 percent<\/a> since 2001, putting about 4.5 million workers out of a job.<\/p>\n

Members of both parties now agree<\/a> that free trade is largely to blame for this decline. Off-shoring<\/a> and \u201cbad\u201d trade deals<\/a> are cited as evidence that trade no longer serves America\u2019s interests. <\/p>\n

The Trump administration\u2019s solution is tariffs. In recent months, entry barriers have been erected, first to protect solar panels<\/a> and washing machines<\/a> in January and then steel and aluminum<\/a> in March.<\/p>\n

Although he\u2019s fighting these trade battles with many partners, including Canada and Europe, most of Trump\u2019s attention is directed toward China. He claims that China manipulates its currency<\/a>, fails to protect<\/a> intellectual property and stunts economic innovation<\/a>. Sweeping tariffs \u2013 beginning with a 25 percent increase on $34 billion<\/a> of Chinese imports \u2013 are an attempt to combat those issues.<\/p>\n

Trump has said another $200 billion<\/a> in tariffs are ready to go \u2013 and that he\u2019s even prepared<\/a> to tax everything China sends to the U.S.<\/p>\n

Unfortunately, there are several reasons to think that tariffs will only harm those Trump wants to protect.<\/p>\n

\n \"\"
\n Some U.S. manufacturers are feeling the impact of tariffs of up to 25 percent on some foreign imports.<\/span>
\n AP Photo\/John Raoux<\/a><\/span>
\n <\/figcaption><\/figure>\n

Tariffs raise prices for consumers<\/h2>\n

The purpose of a tariff is to help domestic companies. <\/p>\n

Tariffs are a tax on imports. As taxes go up, so do the prices of foreign goods. Consider the metal tariffs. Foreign imports of steel and aluminum became more expensive overnight \u2013 to the tune of 25 and 10 percent, respectively. Higher prices drive down consumption of foreign goods while bolstering demand for domestic equivalents. <\/p>\n

Unfortunately, protecting a few narrow industries can generate much broader costs. Not least, consumers now have to pay more for everyday goods. <\/p>\n

Trump\u2019s tariffs on Chinese imports go far beyond steel and aluminum and affect a wide variety of basic products, from consumer electronics to shoes and apparel. <\/p>\n

That\u2019s not a problem for higher earners who can absorb the extra costs. But, for those with more limited incomes, who are especially vulnerable to tariff increases, price hikes can quickly gobble up take-home pay.<\/p>\n

Basic necessities such as food and clothing<\/a> make up a larger share<\/a> of working-class household expenditures when compared to higher-income families<\/a>. And most of those products are imported. Foreign producers make up an overwhelming percentage of sales of many basic goods, such as shoes<\/a>. In fact, one manufacturing industry group reports<\/a> that 80 percent of Walmart\u2019s suppliers are housed across the Pacific. <\/p>\n

One 2017 paper<\/a> estimated that a 10 percent across-the-board increase in tariffs on imported goods would cost the poorest 20 percent of earners $300 a year. <\/p>\n

That\u2019s a meaningful chunk of the less than $13,000 earned<\/a> by the poorest U.S. households in 2015. Moreover, Trump\u2019s first round of tariffs weren\u2019t the 10 percent used in the study. They are 25 percent. <\/p>\n

And the president isn\u2019t stopping there. While the White House initially threatened a 10 percent tariff increase on the next $200 billion of goods he\u2019s targeting, officials are reportedly considering<\/a> raising that to 25 percent. <\/p>\n

Taken together, this means the real impact of tariffs on household incomes could be more than double earlier estimates.<\/p>\n

Tariffs raise prices for companies<\/h2>\n

Tariffs also have negative consequences for American producers that rely on foreign inputs. <\/p>\n

The metals tariffs, for example, mean that manufacturers of cars, aircraft and tractors all have to pay more to produce their goods. Hence the vocal opposition<\/a> to Trump from companies such as Ford<\/a> and Boeing<\/a>. Their costs are now going up, endangering their competitiveness. <\/p>\n

What this also means is that tariffs put jobs at risk \u2013 far more than they help protect. <\/p>\n

Trump\u2019s recent steel and aluminum tariffs were said to benefit as many as 400,000 workers<\/a>. But 10 times as many workers<\/a> \u2013 4.6 million \u2013 are employed in industries that rely on metals as a core input. <\/p>\n

The comparison is even starker for solar panels. About 2,000 workers<\/a> directly manufacture solar panels in the United States. However, 260,000 work in related industries<\/a> such as installation and maintenance. Those workers depend on a thriving solar market \u2013 a market that has stagnated<\/a> since the tariffs.<\/p>\n

If one wants to count jobs, the numbers simply don\u2019t add up to a net benefit for the U.S. economy.<\/p>\n

\n \"\"
\n Farmers and agricultural economists worry that Trump\u2019s trade policies will cost farms billions of dollars in lost income and force some out of business.<\/span>
\n AP Photo\/Nati Harnik<\/a><\/span>
\n <\/figcaption><\/figure>\n

Tariffs make it harder to do business abroad<\/h2>\n

Finally, trade protectionism is a two-way street. <\/p>\n

Beijing wasted no time in responding to Trump\u2019s tariffs, announcing duties of 15 percent to 25 percent on nearly $45 billion<\/a> of U.S. exports to China, mostly agricultural products. And more will be coming<\/a> if the war escalates, with some of the highest tariffs being put on food products. <\/p>\n

Of course, targeting agrarian goods is a strategic decision. Agriculture is one of the United States\u2019 few remaining export-oriented sectors. And, since China is the second-largest<\/a> buyer of U.S. agricultural exports, farmers are particularly vulnerable<\/a> to retaliation. If a country wants to hit the U.S. economy where it hurts, target agriculture.<\/p>\n

China did exactly that, hitting U.S. producers of soybeans, corn, poultry and beef particularly hard. As a result, agricultural workers will find it more difficult to make a living in a sector where incomes have historically lagged behind<\/a> the national average of all industries. <\/p>\n

And poorer areas of the country will be harder hit than others. Three of the states that are the most vulnerable to retaliation<\/a> \u2013 Louisiana, Alabama and South Carolina \u2013 all have per capita incomes far below<\/a> the national average.<\/p>\n

That means that poorer households, in poorer states, face the greatest threat if export-dependent agricultural companies can\u2019t do business with one of their most important trade partners.<\/p>\n

\n \"\"
\n The U.S. could slap tariffs on more than $500 billion in imported Chinese goods. Beijing imported just $130 billion in U.S. goods last year.<\/span>
\n AP Photo\/Ng Han Guan<\/a><\/span>
\n <\/figcaption><\/figure>\n

The bigger picture<\/h2>\n

This is not to say that removing all trade barriers and opening the U.S. economy to all comers will solve the problems facing working-class and poorer Americans. <\/p>\n

No one argues that trade is cost-free. Some industries inevitably contract due to foreign competition. And workers in those industries aren\u2019t easily employed<\/a> in the new jobs that are created. <\/p>\n

But there\u2019s something else that costs jobs, too: trade wars<\/a>. <\/p>\n

\"TheAs tensions continue to escalate, poorer households, already struggling to keep up<\/a>, will face additional downward pressure on their incomes. That\u2019s bad news for the workers whom Trump promised to help.<\/p>\n

Jeffrey Kucik<\/a>, Assistant Professor of Political Science, University of Arizona<\/a><\/em><\/span><\/p>\n

This article was originally published on The Conversation<\/a>. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Jeffrey Kucik, University of Arizona President Donald Trump justifies tariffs on imports by arguing that \u201cunfair trade policies\u201d have harmed American workers. This has led to a trade war in which the U.S. and China have placed tit-for-tat tariffs on each other\u2019s products. Most recently, China said it\u2019s ready to slap tariffs on US$60 billion […]<\/p>\n","protected":false},"author":44,"featured_media":13105,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[277],"tags":[145,3364,479,172,358,1581,766,4897,13,1276,546,1558,4749,104,509],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/13113"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=13113"}],"version-history":[{"count":1,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/13113\/revisions"}],"predecessor-version":[{"id":13114,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/13113\/revisions\/13114"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/13105"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=13113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=13113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=13113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}