By Nathan Walker
During the 44th G7 summit, President Donald Trump called for an elimination of tariffs between the member countries, a move that would promote true free trade between the US and its closest allies.
“Ultimately that’s what you want,” Trump said during a new conference. “You want a tariff free. You want no barriers. And you want no subsidies. Because you have some cases where countries are subsidizing industries and that’s not fair.”
It’s a big change from the tough talk that has come from the White House since Trump’s election.
The statements come amid tensions over the Trump administration’s move to impose tariffs on steel and aluminum imports, designed to protect the US industries from foreign producers that undercut domestic prices. The Trump administration has maintained that protecting these industries is a matter of national security. The tariffs were met tit-for-tat by the EU, Canada, and Mexico on US goods, hitting farmers and manufacturing the hardest.
President Trump has repeatedly called for an end to trade deficits, pointing to situations like the trade imbalance with China, which Washington says stood at a record $375.2 billion last year. Trump’s stance is that these countries are taking unfair advantage of the US, a result of
“It’s going to change. Tariffs will come way down. We’re like the piggy bank that everybody is robbing and that ends.”
The trade practices have led to an exodus of American companies and jobs to other countries. Car manufacturing, for example, has primarily moved to Mexico. According to Bloomberg, the average saving a US company could make by moving to Mexico is $20,000 per worker. It’s an extremely powerful economic incentive. This has led “at least 12 companies” to start the process of setting up in Reynosa, a city located further towards the eastern end of US-Mexico border.
Trump has also pointed to things like the Canadian tariff on US dairy goods, which was at 270% before Trump was even elected.
According to the World Trade Organization, America’s average tariff for imported goods is 2.4%. Canada’s average tariff for imported goods is 3.1%, and the EU’s average tariff for imported goods is 3%.
Tariffs in general are a protectionist by nature, but ultimately do more harm than good. They are a means of benefiting the producer at the expense of the consumer. Those who favor them only think of the interest of the producers immediately benefited by the particular duties involved. They forget the interest of the consumers who are immediately injured by being forced to pay these duties. They also forget, or chose to ignore, the effects on other industries.
When Americans are forced to pay more for a certain product, they have that much less money to pay for other products, and may be forced to forgo their purchases entirely. It’s true, that a tariff does indeed benefit special interests in the short term, but only at the cost of everyone else involved.