POLITICAL COLUMN: Tariffs, and what they do to America

To understand what is going on with the American economy today it is also important to know what tariffs are and what they have done to and for the country in the past.

Tariffs are a tax imposed on a country for the imported goods that enter the country; meaning if a country wants to send goods to America, they must pay the tariff for those goods to enter America. Tariffs are usually set to fixed percentage of the price of the goods.

We can see some of the earliest uses of this system in the ancient Athenian government where grain was a key commodity for most of its people. Because of this, the government restricted the the transport of grain; the only place grain could be imported was through the port of Piraeus where levies for goods raised taxes for the Athenian government.  

Tariffs have helped fund the American government from the beginning. In the some of the first acts once the U.S. became independent from Britain, a movement was led by Alexander Hamilton, who advocated against the British “free trade” policy in favor of tariffs. This opened the way for the American economy to grow and protect its industries.

Industrial protection was one of the biggest concerns and priorities of major American economists all the way until the end of the 19^th century, and tariffs helped protect industries by limiting imports. Tariffs also played a big part in the prior to the civil war. In 1828, congress imposed high tariffs and the south did not like that nearly causing rebellion in South Carolina before it was revoked. Southern agriculture wanted no protection from the state while northern industrial states wanted to keep the protection. Once the war began, Abraham Lincoln led the Republican party to oppose free trade and implemented a 44% tariff to pay for the war efforts and the buildup the American railroad industry. The tariffs stayed this way even after the war and even lasted into the 20^th century, not dropping back until after the Second World War. 

After World War II, tariffs were used as a scare tactic to get other countries to continue fair and respectable trade with America, and this is how we have seen tariffs used in today’s world. The Trump administration’s first term used tariffs much more like earlier presidents, justifying them as protecting industries. Tariffs were put on steel and aluminum imports as well as solar panels and washing machines.

While this boosted the American steel and aluminum mining operations and created many jobs for mining, it also helped continue to cut down the unemployment rate that the Obama administration was working on. Comparatively, the Obama administration was producing more jobs per month compared to the Trump administration. In 2017 African American and Hispanic unemployment rates dropped to 18.3 percent. The policies placed by the first term of the Trump administration helped increase low-income families and boosted the median household income in America. The Biden administration kept most of the Trump administration’s first tariff orders, while cutting the steel and aluminum tariff to China and adding a tariff on EV cars and superconductors. 

With the current trade war between the US and China it is still unclear at this time what exactly will happen. Since February 1st when Trump first increased tariffs on China to 10% China has been retaliating with reciprocal tariffs towards the US starting with 15% and rising all the way to 125%, mirroring trump’s previous retaliation. As of April 24th, China has begun to exempt certain US exports from their tariffs including aerospace equipment and microchips as the US asks the Chinese to notify the government of any goods they could not procure elsewhere. With these tariffs in place both the US and China have had drastic blows to their GDP, with China facing headwinds and possible recession.