International Trade
The United States Congress holds constitutional authority over foreign trade and tariffs. After the world war II, the United States trade policy has always been seeking to realize and promote competitiveness and economic growth. This is to be achieved through reduction of global trade barriers, setting transparent and inclusive rules, enforcement of commitment from partner countries and offering relief to those affected by unfair trade policies (York, 2021). In so many years the United States has been focused on trade policies that are protective. Many countries have migrated from these protectionist trade policies to more accessible, open and transparent policies. The United States has been undergoing changes to its trade policies too. The Trump administration introduced new changes although not all of them were beneficial. Some of these changes introduced during the Trump era were seen to be more detrimental than the beneficial.
Trade policies are responsible for determining the tax charged on imports and exports. The United States still focuses on protecting its manufacturers through its trade policies. All manufacturers even those in foreign countries are protected. Currently, there had been an increase in tariffs causing trade deficit. Most of trade activities in the world are controlled by the United States. It is the biggest national economy and main global trader. It is also an original member of the World Trade Organization(WTO) and a supporter of the rules and regulations of the multilateral trading system. It protects and governs economic interests of American workers and businesses at the same time opening foreign markets. This is the reason why any change in the trade policies affects the whole world as the United States plays a major role in defining International Trade and multinational corporations.
According to the economic theory, international trade is beneficial at the national level but benefits and costs can be distributed unevenly or unevenly concentrated. The Congress is in charge of setting up trade laws, trade negotiating objectives and overseeing executive trade functions conducted by various federal agencies. The lead trade negotiator for United States is the U.S Trade Representative. It coordinates trade policies through a process of interagency. Some of the key trade policies for the United States include support for export financing, having duty free access to the United States markets for approved developing countries, regulating boarder laws touching on effects on imports on the United States industries national security and barriers to US exports.
Tariffs have been proven to be a threat to the economic wellbeing and eventually causing loss of jobs, production and low income. During the Trump administration, approximately $80 billion was imposed on Americans through tariffs on many products (York, 2021). It was one of the largest tax increase over ten years. Most of these tariffs put in place during the Trump’s administration have been retained by the Biden administration. They reduced the GDP by a significant 0,23% and also wages were reduced. Economists state that economic output and income is increased by free trade. On the other hand, the output and income is reduced by trade barriers. It has been proven over time that tariffs lead to increase of prices and reduction available goods and services for the United States consumers and businesses. The Biden administration got rid of tariffs on imports from European Union. The tariffs on imported steel and aluminum imposed during the Trump administration in 2018 and they were later lifted in 2019. These Tariffs were not supporting growth in income and the long term effects would be detrimental to the whole economy.
One of the major means to ending global poverty is through trade. Countries open and with access to international trade tend to experience faster economic growth, improved productivity, innovation, higher income for their population and the people have more opportunities to venture in. The U.S. Trade Representative announced some new changes in the China Trade Policy which will start a tariff exclusion process. China is one of the major countries leading in trade and reducing trade tariffs will be very beneficial to business that rely on it for production and importing goods from China. The United States is considering imposing policies that are against imports from China. I think many local businesses that deal with manufacturing and production will benefit from this and there will be more market from their good. Most consumers imported goods from Chia due to the low prices as a result of less production cost in China. There has also been a review on the steel and aluminum tariffs during the Biden administration.
In 2019, the United States imposed a 10% and 25% tariffs on $7.5 billion European Union goods. The European Union is one of the leaders in export of manufactured goods and a global market for high quality products. I know an employer who runs a company dealing with exported goods from Germany. This tariff has affected his business leading to lower income due to the higher cost of getting goods from the European Union. Consequently, the employees have also felt the effects of these changes as the employer has not reviewed their salaries for the past two years because the business is not making more profit. He fears that at some point he will have to let go of some of his employees if there are no changes in the income generated.
References
York, E. (2021, March 29). Tracking the economic impact of tariffs. Tax Foundation. https://taxfoundation.org/tariffs-trump-trade-war/
Leave a Reply