Whether it’s the price of a burrito at Chipotle or the cost of a brand new Dodge Charger, everyday American consumers and manufacturers are the casualties in trade wars. Regardless of whether one feels tariffs (or the threat of tariffs) are justified in the case of China or Mexico, the fact is that they function as a tax, which means Americans pay the price.
In light of this, why is there so much widespread acceptance of tariffs among conservatives in our state? The June Civitas Poll found that 63 percent of self-identified conservatives voiced their support for such economic protectionism. In addition to this, an astonishing 71 percent of those that support the Trump tariffs – irrespective of political party – believe foreign exporters, like China and Mexico, will be the ones to take the economic hit. Unfortunately this reveals a breakdown in how the electorate understands tariffs.
As of March, 2019, 2,185 steel and aluminum tariff exclusion requests have been filed in North Carolina. An exclusion request is granted by the federal government, “If Commerce does not deem those materials essential for national security and there is no domestic supply of them…”
These requests represent real businesses that employ real people. Nearly one quarter of the workforce in certain parts of our state are employed by the manufacturing industry. Essentially, the far-reaching impact of tariffs has a human toll that affects our counties, our towns, and our families. A recently released Institute for Supply Management (ISM) report found that manufacturing growth is at its lowest in over two years. According to MarketWatch, “The index hit a 14-year peak of 60.8% last August, but it began to decline after a U.S. trade dispute with China intensified and spurred a round of tariffs by both countries.”
This isn’t to say that the economy, including the employment market, aren’t doing exceptionally well. They certainly are and Americans are reaping the benefits of such positive conditions. Yet, compared to this same time last year – which corresponds to the time the tariffs were levied – it has weakened. Instead of building on the momentum we have gained through reducing regulatory and tax burdens, tariffs punish American consumers and businesses. And that approach is neither conservative nor fiscally sound.
Warning about the dangers of restricting free trade, North Carolina-based entrepreneur and free-market advocate Bob Luddy recently wrote the following:
There are no long-term winners in trade wars. Investment in the United States is declining because trade instability creates uncertainty, which impedes long-term investment. It’s imperative that we end the trade wars and return to free markets and certainty.
As we prepare to celebrate our nation’s hard won independence on this Fourth of July, it would serve us well to reflect on the practical economic wisdom found in Adam Smith’s The Wealth of Nations, published the very same year as our Declaration of Independence:
Every such law, therefore, imposes a real tax upon the whole country, not in favour of that particular class of workmen who were injured by our neighbours [tariff], but of some other class.
The 21st century translation of this timeless tome’s wisdom? Tariffs ain’t America first.