ECON 201 International Trade Assignment
Short-Term and Long-Term Impact on Jobs based on Steel and Aluminum Tariffs
Steel and aluminum tariffs would positively impact employment, particularly on the U.S. aluminum and steel producers. These tariffs would also impact a handful of other sectors with the capability of attracting capital and the released labor from other sectors harmed by retaliation and tariffs. However, tariffs based on aluminum and steel would harm the overall U.S. economy, including employees within other manufacturing sectors utilizing aluminum and steel (Francois, Baughman & Anthony, 2018). Such positive and negative effects would always undulate through the U.S. economy, hence affecting within every industry.
In the short term, these tariffs would likely lower the GDP of the U.S. by about 0.2 percent yearly, hence reducing the country’s imports and exports, and negatively impacting the employment rate in the country. In the long-term, the tariffs based on steel and aluminum would significantly increase the annual rate of the non-ferrous metals employment and the steel employment by approximately 26,280 jobs over the first two-three years. However, these tariffs would as well reduce the U.S. net employment by 432,747 jobs all through the rest of the country’s economy, thereby leading to a total net loss of about 400,445 jobs (York, 2018). In the long-term, about sixteen jobs would be lost for every job gained on aluminum and steel, of which more than two thirds of the jobs lost would negatively impact workers within low-skill and production jobs.
The Impact of Tire Tariff on the Economy Overall
The tire tariff initiative within the U.S. generally affected the country’s economy as it helped in saving a maximum of 1,200 jobs. Besides, the buyers of light truck and car tires in the United States are always paying high prices for this trade protection exercise. Additionally, the tire tariff resulted in the U.S. consumers spending more money on tires thereby significantly reducing their spending on other retail goods, which eventually and indirectly reduced employment rates within the retail industry (Hufbauer & Lowry, 2012). Generally, it appears that the tire tariff costs about 2,532 jobs on the U.S. economy, particularly when the gains in tire manufacturing are used to off-set against the losses within the retail sector.
Additionally, the U.S. economy was hard hit as a result of tire tariff because China retaliated to that protectionism by enforcing antidumping duties on the U.S. exports of its chicken parts, thereby costing about $1 billion sales within that sector. Besides, the tire tariff costs the U.S. about 3,732 jobs within the retail sector and was politically unnoticed as a result of being widely disbursed (Xiong, 2017). This net loss of jobs within the U.S. economy is because of the fact that tire tariffs always take away many jobs from the retail sector more than what it saves within the manufacturing sector.
Effectiveness of a Tariff
From a personal perspective, I think that tariffs are not effective in changing a country’s economic performance. Tariffs are known for raising prices in addition to reducing the available quantities of services and goods for the consumers and businesses in the U.S (Chung & Lee, 2022). As a result, this leads to reduced employment, lower income, and eventually lower economic output. Besides, tariff would result in lower employment rate, wages, and GDP within the long-run, in addition to lower progressive U.S. tax code since the increased tax burden would mostly affect the middle- and lower-income households.
Chung, S., & Lee, J. (2022). The price effect of China tire safeguard. Applied Economics, 1-12.
Francois, J., Baughman, L. M., & Anthony, D. (2018). Round 3:‘Trade Discussion’or ‘Trade War’? The Estimated Impacts of Tariffs on Steel and Aluminum. Policy Brief, June, 5, 2018.
Hufbauer, G. C., & Lowry, S. (2012). US Tire Tariffs: Saving Few Jobs at High Cost. Peterson Institute for International Economics, 1-14.
Xiong, B. (2017). The implications of US punitive tariffs on Chinese tires for rubber exports from South-East Asia. Journal of the Asia Pacific Economy, 22(4), 575-586.
York, E. (2018). The impact of trade and tariffs on the United States. Tax Foundation: Fiscal Fact No, 595, 1-9.