Michaela Lumpert, Reporter
Jordan Leitch, Editor
President Trump enacted new tariffs on Chinese goods that could affect the price of every day products. These tariffs went into effect on Sept. 24, starting with a 10 percent increase in prices and eventually will rise to 25 percent by Jan. 1, 2019.
The tariffs that Trump created directly affects trade between China and the U.S. The products most affected by the new tariffs are: electronics, some household objects, food and tools.
The basic definition of a tariff is that it’s a tax on an imported good produced in a foreign country rather than domestically. It increases the price of the foreign good, trying to encourage the growth of domestic industry.
Dr. Brian Meehan, assistant professor of Economics in the Campbell School of Business, said that in theory, the new tariff Trump proposed should have a positive effect on the U.S. by promoting citizens to buy domestic products, but ultimately, it’s having a negative effect on the American economy.
Meehan said that when a tariff is created, it provides the idea that domestic industries can compete against higher priced foreign alternatives. But what begins to occur, as he explains, is that some domestic industries are trapped producing goods that where once imported.
“It all comes at the expense of the consumers who pay higher prices, and jobs and resources which would have been freed up to create other goods and services are now stuck in these industries,” Meehan said.
Another problem that the American economy is facing due to the tariffs is an increase in the price of intermediate goods. Meehan said that when these intermediate goods increase in price, producers must then increase consumer prices to offset the new cost of the intermediate goods. As the price increases for these goods, consumers will then start to look for new producers that are offering the same products at a lower price; therefore, hurting the original producers who were selling the product.
“What ends up happening is a welfare loss, where the cost to consumers is more than the gains to those few producers,” Meehan said.
Junior economics major Emma Duke also noticed a shift in the American economy due to the new tariff.
“We are all about free trade and free market because the whole point of that is to make everyone better off,” Duke said. “And if we don’t have a comparative advantage of producing electronics, then we need to be importing them.”
For Berry students, the effects of this tariff will soon be felt especially when students start looking for new computers and cellphones.
“Prices are going to be raised for things like computers and phones,” Meehan said. “The prices of these things are going up as a result of these tariffs. A large part of [Berry students’] budgets are electronics, which are all going to be impacted, and consumer prices are going to be impacted.”
Not only are Berry students feeling its effects, but also the country at large. The new tariff could include hurting the trade relationship between the US and China. Meehan explains that trade between the US and China should be mutually beneficial.
“When we engage in trade with China, we both gain,” Meehan said. “Not seeing it that way is a detriment to both countries and to the world at large. A trade war is a destructive thing; a lot of the world’s wealth is in prosperity, and it’s based on exchange and trade, both with the rich and the very poor.”
Some people are waiting to see what truly happens with the tariffs once they go into full effect on Jan. 1. Senior political science major Alex Beato understands how the tariff could be beneficial, but awaits the arrival of the tariff’s effects.
“I think the tariffs have the potential to be successful, but since the dynamics between China and the U.S. are so complex, there really is no certainty either way,” Beato said.
Meehan said that over the course of the next few months, the increase in prices might not be as apparent as a sales tax, but it will still be felt by everyone including Berry students.
“It’s going to be an increase in prices or really it’s going to be not rapidly falling prices,” Meehan said.