Why Tariffs Will Destroy The US Economy

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Hi Friends,

Today, I want to discuss tariffs. I will explain what tariffs are, what will happen, and how they will affect our everyday lives. President Trump has just recently announced his plan for tariffs. Many of you may be wondering what tariffs are. Tariffs are import/export taxes that are a certain percentage of the import value. They are put on certain countries as punishment by other countries. Depending on how they are used, tariffs can usually have certain effects on economies.

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As mentioned in the article “The US Debt Problem,” President Trump will likely urge Congress to extend the tax cuts from 2017. This is going to affect the US deficit. Due to the tax cuts being extended, President Trump is launching tariffs. He plans to enforce strict tariffs on Canada, Mexico, & China. President Trump said that these countries “have allowed an unprecedented invasion of fentanyl that is killing American citizens, and also illegal immigrants into our country.” To punish them, he is inflicting strict tariffs on these countries.

These tariffs are going to be 25% on Canadian and Mexican goods, while they will be 10% on Chinese goods. These tariffs are going to make these goods more expensive as companies normally inflate the price of goods or services if it will cost them more to make. This essentially makes those goods 10-25% price for us. This could negatively affect the US economy because all these goods will be more expensive.

For example, tariffs might lead to higher gas prices. We receive petroleum imports from Canada, and if they decide to stop or increase their prices, then gas prices are going to skyrocket fast, and we could even be limited in gas if we receive less gas from Canada. This will be a huge problem because our gas prices are already really high because of the Russia-Ukraine war. If these tariffs persist, we might even have a gas shortage.

The governments that are going to get tariffs imposed on their country are not only really mad, and they might cut certain supplies from the US due to these tariffs. These countries could also start a trade war because these goods will be produced less due to a major shortage. The countries are planning to enforce tariffs on US exports. This will hurt the US economy as well as it could damage relationships with certain US countries.

Even after all of these disadvantages of tariffs, they will also provide a revenue source for the US government. They are projected to raise about $3 trillion in the next ten years with these tariffs. Although, this revenue will be wasted by the tax extensions that are likely to happen soon. These tariffs are likely to make the US debt even worse than it is now. This is also because of the tax extensions that I mentioned earlier.

Just very recently, Canada & Mexico have negotiated to postpone the tariffs for an entire month. President Trump also mentioned that he may reduce the tariff for Canadian oil down to 10%. I also want to mention something that happened last week. Last week, all federal government employees got an email from the government telling them they could take delayed resignation where they would get paid until next September without working but they would resign. This is a scary time for a lot of people in America because they are at risk of losing their jobs. This is a really sad and scary time for a lot of people, but I wanted to mention this to help and try and manage.

Anyway, thank you so much for reading this article on Friday Finance. Thank you so much for subscribing, and I want to share some recent announcements. One, I now have paid subscriptions on beehiiv and you can go to: fridayfinancedc.beehiiv.com/upgrade. Have a great week and I will see you next week.

Thanks,

Jacob Gans

Friday Finance