Student Opinion. President Trump’s latest wave of on-again, off-again tariffs has created anxiety for global markets, businesses and consumers. The New York Times
Students, read one or both of the articles below and discuss:
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How much do you and your family talk about money? What are those conversations typically like? Have you been talking about the economy recently — about tariffs, the stock market, your parents’ jobs or businesses or anything else?
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Has the economic upheaval of the past week affected how you and your family are handling money? Are you pulling back on your spending? Stocking up on items that might get more expensive? Investing in the stock market? Or are you operating as usual?
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Caitlin McGarry writes in Wirecutter, “Nearly anything you buy is likely to be affected by tariffs in some way.” If prices do increase for items like electronics, clothing or food, how might that change your shopping habits?
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What is your reaction to Mr. Trump’s tariffs? Do you think they are an important tool for addressing imbalances in international trade and providing tax revenue for the American government, as the economist Oren Cass suggests? Or will the White House’s haphazard rollout ultimately be ineffective and damage the American people and economy, as the Times Editorial Board argues?
Tariffs. Stock market. Inflation. Recession.
Have you heard any of those words in the news lately?
If so, it’s most likely because of President Trump’s latest trade policies. The administration last week imposed a new set of aggressive tariffs, or taxes on imported goods, on dozens of countries, and then later that day said he would halt them for the next 90 days. The administration kept, and then raised, tariffs on China. Those were on top of other global tariffs Mr. Trump previously put in place, including for steel and aluminum products, as well as a 10 percent base line for virtually all imports from around the world.
The chaotic rollout has roiled stock markets, set off a tit-for-tat trade spat with China and upended the global economy. For ordinary people, it has created uncertainty and anxiety, spurring, in some cases, panic shopping as people prepare for prices on electronics, appliances and other goods to increase.
Have you been following what’s happening in the economy or talking about it with others? How is it affecting you and your family, if at all?
In “Trump Has Threatened Much Worse, but the 10% Tariffs Will Still Sting,” Patricia Cohen explains how the policies could make everything more expensive for businesses and consumers:
When Donald J. Trump championed the idea of a 10 percent blanket tariff during the campaign, many people, whether for or against, were taken aback by how radical the idea was.
Alarms sounded about higher inflation, lost jobs, slower growth or recession. The prospect seemed so outlandish that most economists and Wall Street analysts who gamed out the possibilities tended to treat a 10 percent tariff simply as a bargaining tool.
Now, after a rapid-fire series of announcements from the White House that promised, imposed, reversed, delayed, decreased and increased tariffs, the 10 percent solution is looking like the most temperate choice rather than the most revolutionary, especially now that a red-hot trade war between China and the United States is blazing.
Yet 10 percent tariffs have not lost their sting.
At that level, universal tariffs still hit more than 10 times as many imports as the ones targeted during Mr. Trump’s first term, and are significantly higher and broader than anything the United States has tried in more than 90 years.
The tariff rate is “quite extreme,” said Carsten Brzeski, chief eurozone economist at ING, a Dutch bank. “It still brings us back to levels last seen during the 1930s.”
In addition to measures targeting China, Mr. Trump powered up a long list of punishing taxes — including a flat 10 percent tariff on most imports — on April 9.
“For the U.S. customer, it means everything is going to become more expensive,” Mr. Brzeski said.
Researchers have previously estimated that a 10 percent tariff would cost the average American household $1,700 to $2,350 more a year.
Switching to, say, a cheaper American brand of mustard instead of a French one may save a shopper less than hoped. When tariffs on a foreign good go up, domestic manufacturers can take the opportunity to raise their own prices, economists have found.
What are tariffs, and why might they cause prices to go up? Here is an explainer from The New York Times:
A tariff is a government surcharge on products imported from other countries.
Tariffs are paid by the companies that import the goods. The revenue from U.S. tariffs is paid by U.S. importers to the U.S. Treasury Department.
For example, if Walmart imports a $100 shoe from Vietnam — which faces a 46 percent tariff — Walmart will owe $46.00 in tariffs to the U.S. government.
What happens next?
Walmart could try to force the cost onto the Vietnamese shoe manufacturer, by telling it Walmart will pay less for the product.
Walmart could cut into its own profit margins and absorb the cost of the tariff.
Walmart could raise the price of the shoes at its stores.
Or, some combination of the above.
Economists found that, when Mr. Trump put tariffs on China in his first term, most of that cost was passed on to consumers. But economic studies found that his tariffs on foreign steel were a bit different; only about half of those costs were passed on to customers.
