Donald Trump’s proposal to interfere free international trade: a 45% tariff on Chinese exports

When Donald Trump was being interviewed by the New York Times in January 2016, he said that he would add a 45 percent tariff on Chinese exports to the United States. However, are benefits from the market with this tariff more than those from market without tariff?

Chinese low-priced goods producers are indeed strong competitors for the local American producers. According to tariff shifting figure, the price of Chinese goods will be much larger so that it would be easier for American companies to compete. In addition, the money gone to government’s pocket can be used to create more manufacturing jobs for local people.

However, as Chinese goods becoming more expensive, low-income Americans who usually purchase these goods have to raise their consumption. In addition, according to the concept we learned in the beginning of this semester (If cost goes up, supply curve will shift up which causes price going up), prices of productions that are made from Chinese materials are also going to increase. Moreover, as the former journal states, China also holds a significant amount of stock of US Treasury bonds, so that China could push back from dumping those. If not, China can also impress a tariff in exports from the United states. Therefore, from the perspective of American residents and market participants, these disadvantages are more crucial than the benefit of inserting a 45% tariff on Chinese exports.

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