Local opinion: The truth about tariffs and Trump's claims

Donald Trump claims tariffs will balance America’s budget, make our country an industrial power and bring back billions of dollars to reduce national debt. Thus far his on-again, off-again tariffs have sent the stock market plunging and rocked the world economy. Trump says almost 100 countries are waiting to strike a deal. Trump paused the tariffs for 90 days so he can personally broker a big, beautiful deal with each of them.

Tariffs are a tax that is passed on to the consumer; a surcharge added to the price of goods when imported. Tariffs are paid by the importer not by the exporter. The tax is passed on to distributors and eventually to the customer. The “windfall” that Trump refers to will not come from a foreign country but from the American consumer.

Trump’s goal is to increase the cost of imported goods and force manufacturers to relocate their plants in America. Trump sounds as if the US shouldn’t import anything at all and be a perfectly closed economy making everything at home, “If it’s made in America, there will be no tariff; it’s that simple,” he says. Not really.

Often it is more economical to produce goods overseas. This is what author Karl Rove calls the “Law of Comparative Advantages.” For example, coffee grows in Hawaii, but almost all coffee we drink comes from tropical countries like Colombia, Costa Rica, and Indonesia. During the winter, most fruits and vegetables are imported; produce doesn’t do well in frigid weather. Ninety-nine percent of shoes are imported as well as much clothing. Most shoe manufacturers, even those with U.S. plants, rely on foreign sources.

The cost to build plants, install equipment and relocate or hire trained personnel is overwhelming. Businesses that moved overseas often received attractive incentives. Is the US prepared to offer similar enticements? If so, how much and for how long? Then there is the availability of workers, skilled or unskilled in a tight job market. Will our work force find menial tasks such as making shirts or shoes attractive?

Just because a business relocates back to the US does not mean offshore production will stop. As Trump looks inward, others broaden their vision, fill the void and expand business worldwide. Ninety-six percent of the world population lives outside the United States.

Trump’s tariffs spell big trouble for farmers. Until the first trade war erupted between China and the U.S. during Trump’s first term, China was the No. 1 destination for U.S. agricultural goods. That came to a screeching halt during the 2018 trade war until China signed a 2019 agreement to import a set volume of US agricultural goods for two years. China began diversifying its suppliers, by buying food and grain from reliable suppliers such as Brazil, Argentina and Uruguay.

The USDA estimates 40% of soybeans are exported. China and Mexico are the largest markets, eclipsing all others. Brazil is the world’s largest grower and exporter of soybeans and is poised to have a record soybean crop for the 2024/25 season, projected to reach 169 million metric tons. This is a significant increase from last year and continues Brazil’s trend as a global leader in soybean production and exports.

In addition to soybeans, American farmers export pork, beef, corn, poultry, wheat fruits, vegetables and much more. Farmers have been some of Trump’s most loyal supporters and now they will be innocent victims of his tariffs. Once an export market is lost, it is difficult to gain it back as competitors gear up production to meet demand. Trump has promised to compensate farmers with more subsidies, how will that balance the budget?

I learned from Economics classes in college that with tariffs, the end consumer loses. Higher-end earners feel less of an impact than those in the working class or the poorer, struggling class since the well-to-do can continue buying their wants and needs which is not the case for those less fortunate.

The Wall Street Journal editorial board recently called Trump’s tariff tantrum “the dumbest trade war in history.” That’s the truth about Trump’s tariffs.