Ninety-three percent of Donald Trump voters said the economy was a major factor behind their vote. Yet, ever since Trump got into office as President of the United States, stocks have been down and avocado prices have been going up.
This makes it seem as if the United States economy could be going down. But, the only current problems with this economy are inflation and the high cost of living. Unemployment levels are down, the GDP is much stronger than before, and minimum wages are on the rise.
That could all change since March 4, the delayed tariffs on Mexico and Canada are meant to be set into place. So, what are tariffs and why were they delayed?
“Tariffs are taxations, basically, that are placed on other countries that want to do business with the United States,” history teacher Jordan Rhodes said. “When they send us their goods, it’s like a fee that they have to pay to bring their goods into the country.”
Tariffs go hand in hand with the idea of protectionism and the downfall of free trade. Economically, it’s United States companies that are going to pay for imported raw materials, leading them to raise their prices and cut employees to still make a profit.
“The idea behind them is political, more than anything, to protect businesses in your country against a foreign competition that may be much cheaper for an input, like labor,” economics teacher Bradley Urban said.
This goes along with Trump’s plans to make America a self-sustaining country, but it could also make the country isolationist and start a tariff war.
“The tariff conversation right now is with Mexico, Canada and China,” economics teacher Alexis Rocha said. “If we were to increase our tariffs for those countries, they can retaliate with an increase in their tariffs as well.”
This is what China, Canada and Mexico will do once the tariffs are in place. So, what is the point?
“The idea of tariffs is, in the long run, called leverage,” Rhodes said. “You can try to bring people to the bargaining table and say, ‘I’ll lift tariffs if you do this’ because countries want to do business with the United States.”
This can lead to tense negotiations.
“I think it is a more political way to get something done, more of a threat by using the economic power of the United States,” Urban said.
This threat has recently worked against Colombia in an immigration dispute.
Politically, Mexico and Canada added extra security to their borders as part of the temporary negotiation. China, on the other hand, added several tariffs ranging from ten to 15%.
“President Trump’s main reason for the tariffs is to come into agreement and hold Mexico, Canada and China accountable to their promises on stopping illegal immigration and fentanyl from coming into the US,” Rocha said.
