Trump’s tariffs will make almost everything more expensive — and maybe cost you your job
President-elect Donald Trump wants to wage a war on free trade between the United States and foreign nations.
In Trump's view, countries such as China and Mexico are stealing American manufacturing jobs. He's vowed to try and bring those jobs back by imposing tariffs on goods imported from those nations, as well as others, in hopes of deterring companies from making their products abroad.
According to CNN, Trump may use an executive order — a tactic he's blasted President Barack Obama for employing during his eight years in the White House — to impose a 5% to 10% tariff on all goods imported into the United States.
But those tariffs — just another word for taxes on imported goods — aren't likely to bring jobs back to the states.
Instead, they could negatively impact both your bank account and your job security.
The impact of tariffs
Tariffs are specifically designed to increase the cost of goods imported into the country, making them pricier for the average consumer — i.e. you.
Trump hopes tariffs will convince companies to manufacture their goods in America, thereby creating more jobs for U.S. workers, but tariffs could even hurt companies that make their products locally.
For example, a number of car manufacturers build their cars in the United States, but many of the parts inside those cars are made overseas. So, even though the vehicle is assembled here, the cost to make that car would rise should Trump decide to impose tariffs.
Tariffs could either reduce profits for said car manufacturers, possibly increasing the chance for employee layoffs — or companies could choose to increase the price of the cars you buy and lease to make up the difference.
Similarly, even companies that decide to move manufacturing back to the United States because of tariffs would need time to build local manufacturing plants. That process could take years and would present an additional cost to the company, which could potentially be passed onto consumers.
Likewise, companies that continue to make their products abroad are likely to simply raise the price of the items they sell — another cost of Trump's tariffs consumers might absorb.
Without an immediate corresponding boost to wages, experts say the increased cost of goods could hurt U.S. consumers and possibly stunt economic growth. In fact, studies have shown trade wars disproportionately hurt the spending power of lower-income Americans.
The trade blame game
As Trump mulls tariffs, many say his ire at countries such as China and Mexico is misplaced.
Rather, automation in manufacturing processes is behind many of the jobs lost in the country.
That's something a number of Republicans — who are traditionally pro-business and therefore anti-tariff — have been pointing to as Trump ratchets up his trade-war talk.
Republican Sen. Ben Sasse has been sounding alarm bells regarding the effects of automation on jobs, saying politicians are "lying" to workers when they say trade is solely to blame.
Senate Majority Whip John Cornyn tweeted a story from the New York Times about the effects of automation on job losses, suggesting he feels similarly.
Still, Trump is hell-bent on the idea that China — the United States' largest goods-trading partner, according to the Office of the United States Trade Representative — is to blame.
The possibility of a trade war with China makes Trump's own advisors wary of the negative impact it could have on the U.S. economy.
"If you get into a trade war with China, sooner or later we'll have to come to grips with that," Carl Icahn, a billionaire businessman whom Trump named special adviser on regulatory reform, told CNBC. "That's not my decision at all."