The Economics of Tariffs: Can Restricting International Trade Be Good For the Economy?
In recent political news, trade policy has grabbed the spotlight.
Trade deficits and outsourcing were central debate topics in the 2016 election. Eight of the 50 executive orders issued by President Donald Trump in his first 100 days in office were related to trade. And in Congress, imposition of new import tariffs are a key element of various plans to finance tax reform legislation.
International trade represents a substantial component of the U.S. economy. In 2015, imports of goods and services amounted to 15 percent of U.S. GDP, and exports accounted for an additional 13 percent. As such, changes in trade policy can have huge economic repercussions on both producers and consumers— some positive, some negative.
United States trade policy can also have a substantial impact close to home.
In 2015, over 40 percent of the more than $30 billion in North Carolina exports went to three countries — Canada, Mexico and China — who have threatened to “retaliate” if their producers are negatively affected by changes in U.S. trade policy.
In the May/June 2017 issue of the NC State Economist, Dr. Thomas Grennes from the Department of Agricultural and Resource Economics, reviews the economic impacts of tariffs and other taxes on internationally traded goods.
- What are tariffs and what are the rules?
- Do tariffs create jobs for Americans?
- Are there non-tariff barriers to trade?
- Impact to America if free trade agreements are negotiated without us.
- Dr. Grennes’ conclusion on tariffs.
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