How Would High Tariffs Hurt America Apex?

Tariffs, which are a tax on imported goods, are a form trade protection and can cause monetary damage. The goal of tariffs is to increase import costs and protect the American economy against unfair trade practices. In the early 1840s, President George Washington placed a tariff on imports to protect the country’s economy.

The effects of tariffs on the economy vary, but in general, they raise prices and reduce demand. For example, if the United States increases its tariffs on goods from China by 50%, the cost of production increases, which is passed on to consumers and increases the price of goods. This causes a decrease in domestic demand for the goods and decreases the amount of money available for business expansion. Additionally, tariffs can cause job losses in sensitive industries.

Imports from China are a large source of intermediate inputs for many U.S. manufacturing industries. Higher tariffs force manufacturers to increase their prices on imported intermediates, which hurts the consumer and forces them to cut production. Some firms will be unable to compete in the new environment and may even close.

If the Biden administration wants to make any headway in the trade war, it must take bolder measures and reduce tariffs in order to generate serious diplomatic engagement with China and create leverage on other issues. However, removing only a portion of the tariffs would only perpetuate the view that the U.S. does not have a long-term strategy for dealing with China.