How Tariffs Actually Work ft. Liz Dye

Summary

The video explores the economic impact of Trump's trade policies, particularly tariffs, and their unintended consequences. While Trump aimed to protect U.S. industries and reduce trade deficits, the tariffs led to job losses in dependent sectors and increased costs for consumers. The steel tariffs, for example, did not revive jobs but raised input costs, while washing machine tariffs caused higher prices for consumers. The video also addresses retaliatory measures from trading partners, such as China's tariffs on American goods, which hurt U.S. farmers. Ultimately, the policies failed to achieve their goals and even risked economic harm to American households, prompting critiques about their real effectiveness.

Takeaways

• 😀 Trump's tariffs were intended to reduce trade deficits and bring jobs back to the U.S., but they failed to achieve these goals.
• 😀 The steel tariffs imposed in 2018 did not result in a net increase in steel jobs, and instead caused job losses in steel-dependent industries.
• 😀 Trump's trade wars led to higher consumer prices, with costs increasing for everyday items like washing machines and dryers due to tariff-related price hikes.
• 😀 Other countries, like China, retaliated against U.S. tariffs, affecting American agricultural exports, especially soybeans and wheat.
• 😀 Trump's promise that trade wars would be easy to win proved to be misguided, as tariffs ended up hurting American consumers and businesses more than anticipated.
• 😀 The tariffs imposed on washing machines raised their price by an average of $86, while unrelated items like dryers saw price increases of $92.
• 😀 Trade wars often lead to retaliatory tariffs that do not help reduce trade deficits, as seen with China during Trump's administration.
• 😀 Trump's economic advisors advised against tariffs, but he ignored this advice and doubled down on imposing more tariffs, including a 25% tariff on all imports from Canada and Mexico.
• 😀 If Trump's tariffs on China were to be fully implemented, American households could face an average reduction in income of $1,800 annually by 2025.
• 😀 Despite the possibility of mass tariffs, companies like Black and Decker and AutoZone stated they would likely shift production to other countries, not the U.S., as relocating production domestically is not cost-effective.
• 😀 The creation of a platform like Nebula is presented as a way to gain access to more in-depth analysis and exclusive content on topics like tariffs and their global impact.

Q & A

What was the primary objective behind the trade tariffs imposed by Trump?

Trump imposed tariffs on other countries, particularly China, with the goal of reducing the U.S. trade deficit and bringing back manufacturing jobs to the U.S. He believed these tariffs would encourage countries to buy more American goods and reduce the flow of imports.

What was the impact of Trump's steel tariffs on U.S. steel jobs?

Despite the steel tariffs, the number of steel jobs in the U.S. remained the same when Trump left office as it was when he entered, according to the St. Louis Fed. The tariffs failed to revive steel jobs significantly.

How did the steel tariffs affect other industries?

The steel tariffs led to increased costs for industries dependent on steel, such as car manufacturing and construction. This resulted in the loss of approximately 75,000 jobs in steel-dependent industries.

What was the consumer price impact of tariffs on washing machines?

The tariffs on washing machines raised their prices by an average of $86. Interestingly, dryers, which were not subject to new tariffs, saw a price increase of $92, as companies took advantage of the situation to raise prices across the board.

What did the U.S. government do to mitigate the impact of tariffs on farmers?

In response to China’s retaliatory tariffs, the U.S. government provided $28 billion in aid to farmers who were affected by the loss of agricultural exports, particularly soybeans and wheat.

Did the tariffs reduce the U.S.-China trade deficit?

No, the U.S.-China trade deficit actually grew from $375 billion in 2017 to $418 billion in 2018, despite the implementation of tariffs. The tariffs did not achieve the goal of reducing the trade deficit.

What was the effect of Trump's trade war on consumer goods?

The National Retail Federation warned that massive tariffs could increase the price of consumer goods by $46 billion to $78 billion annually, which would likely lead to higher costs for U.S. consumers.

What is the stance of U.S. companies like Black & Decker and AutoZone on shifting production to the U.S. due to tariffs?

Both Black & Decker and AutoZone executives stated that relocating production to the U.S. was not cost-effective and unlikely. Instead, they were more likely to shift production to other Asian countries or Mexico if tariffs were imposed.

What would be the financial impact of a 10% across-the-board tariff on U.S. households in 2025?

According to the Tax Policy Center, a 10% tariff would result in a decrease in after-tax incomes for U.S. households by about $1,800 per year by 2025.

How did Trump plan to escalate the trade war in 2020, and what were the implications?

Trump announced plans to double down on tariffs, imposing a 25% tariff on all imports from Canada and Mexico, as well as a 10% tariff on Chinese goods. This would likely disrupt trade agreements like the USMCA and potentially worsen trade relations.