Tariffs: they’re the word on everyone’s mouth. Some people think they’ll solve all our problems, some think they’ll be our downfall. They’ve been around for millennia, but they’ve recently been reintroduced into the mainstream through Donald Trump, our current president. Trump promises tariffs on our allies and enemies alike, something almost unheard of for the last 80 years. Despite their current spot in the limelight, most people only have a vague idea of what tariffs are, if they have any idea at all. Searches related to tariffs increased by over 1,650% the day after the election (TheNightly.com). So what are tariffs, what have they done in history, and what do they mean for us, locally and globally?
Ella Lloyd, a freshman here at PV, has volunteered to show what the average person knows about tariffs. She has “heard the word [tariffs] before, but I don’t know what it is.” Her best guess on what a tariff is, is that “a tariff is a terror… enemies are tariffs.”, and in a modern context, she is half right. Currently, tariffs are being used as an economic tool to show a point to other nations. But before delving into geopolitical implications, first let’s establish what a tariff is.
In short, a tariff is a tax on international imports from select countries that raises the product’s price, transfers the extra money to the government, and is supposed to protect local business. An example of this would be if France was mass-producing oranges for cheap and monopolizing the market. Placing a tariff on French orange imports would tax the import and make the price of French oranges equal to or in excess of the locally grown orange price. But tariffs aren’t all good, in this example the tariff would cause the American sellers could raise their orange prices to match the French ones and make extra money, making the price of oranges jump exponentially, possibly starving the market of new customers and keeping lower-income families from oranges altogether. This is just one hypothetical situation, as a tariff can be applied on anything from a computer chip to aluminum to bread or to any other goods exported from a single country.
An Economics and Advanced US History Teacher on campus, Mr. Vought described tariffs as “tools [that] have been used by nations across time to try and affect political change or improve one’s own economic standing, while hurting another nation’s economic standing, and it’s to very, very mixed results… Tariffs are tradeoffs.” One example he referenced is Cuba, which we have had a trade embargo (ban on imports) on since the 1960’s to try and deter their communist government, but to no effect. Mr. Vought said that one message he would send to the general public about tariffs and embargoes would be, “in a world where we all appreciate and benefit from international trade, I think [we should keep] prices as low as possible and thus [reduce] or [eliminate] tariffs, [eliminate] sanctions, [eliminate] embargoes, I think we should get rid of all of it, because there’s very little evidence that suggests that any of that actually results in the political change that the presidents seek.” Trump’s tariffs could have heavy implications for our economy, but something one may wonder is how all this will trickle down to us at the local level. Mr. Vought stated, “Locally, I doubt we’ll see any changes, honestly. At the national level, certainly there’s gonna be a lot of argument about this, and that’s understandable. We’re in an inflationary economy right now. Inflation levels have been brought down a lot, but tariffs and trade policy in general could hurt our efforts to bring inflation down… Whether or not we feel that locally, it’s hard to say. California’s economy is very strong on the one hand, and unless this really extends out over a period of a year or longer, I doubt we’ll notice any real substantive price changes directly as a result of what Mr. Trump is doing.”
So despite Trump’s tariffs reaching upwards of 25%, many argue that not much has been felt locally, and as Vought has said, the U.S most likely won’t for a period of time. This delay is due to a few reasons. One reason is that we have existing inventory for many items, and so the price of groceries or other expirable goods will rise before the price of durable goods like cars or appliances. The nation would see this price hike once inventory is depleted. Large corporations may also absorb some of the extra price of products to maintain customers under the impression that these tariffs will not last. These large corporations also have the ability to negotiate directly with the importer for lower original prices to make up for the tariff, but local businesses do not have this option. So these tariffs, despite being advertised as for local businesses, will help billion-dollar corporations who can maintain the original price or influence the distributor more, instead of the small businesses in mind.
Cecilia Richardson, the owner of African Connection and Cultural Crossroads, a local store which depends on African imports, stated that “The retailers aren’t affected by the tariffs. The importer raises the price, then the retailer matches it, and the consumer is the one who pays. In other words, the retailer isn’t going to keep the same price if the importer charges more.” In this way, Ms Richardson has summed up what economists have been warning about tariffs and the economy raising prices passed on to customers or losing customers all together. Even if the retailer is not being affected by the tariffs through the supplier, they may come close to or match the new higher price their competitors have to pay from the tariffs.
The majority of Americans seem to have signed up for tariffs, without understanding them fully. But in Chico, the understanding as seen through these interviews is that Tariffs may be less effective in practice, and might fail to help local businesses and American citizens as was intended. Although heralded by some as the grand fix for all our economic problems, the truth features much more nuance. More often than they should, the new understanding is that tariffs can help corporations corner the market, while fostering resent towards our trade partners, and can ultimately raise prices for the consumer. We are a country that is founded on outrage towards taxes, and if prices stay too high too long, public opinion on tariffs may sour.
