Tariffs: Good for politics, bad for people

Editor's note: Yi Xin is a Beijing-based international affairs commentator. The article reflects the author's opinions and not necessarily the views of CGTN.

Kent International, a bike manufacturer based in New Jersey, is paying an average of 23 percent tariffs on bike parts bought from China. "The help we need is tariff relief for any American assembler," said Arnold Kamler, chairman of the company board and an icon in the U.S. bike industry. "With tariff relief, we could grow our U.S. business five-fold in three years."

"To be clear, I'm the one who paid the tariffs. China did not," stated Deena Ghazarian, founder and CEO of Austere, a consumer tech accessories company. "I had to absorb these costs of the tariffs to avoid pricing my products out of the competitive accessories landscape."

Unfortunately, tariffs levied to supposedly protect these businesses are doing just the opposite.

Many today have come to recognize that tariffs are taxes on consumers and producers alike. According to a report from Moody's Investors Service, American consumers bore nearly 93 percent of the costs of tariffs applied to Chinese goods. The extra financial burden could mean fewer visits to a favorite restaurant downtown or failing to pay an unexpected home repair or hospital bill.

In the long run, tariffs harm the overall economy. Pricing foreign competitors higher will not make domestic products a better value for money. What's worse, by reducing the demand for imports, tariffs strengthen the currency in the foreign exchange market, make exports less competitive, and in turn, lead to declines in economic output and employment. A 2021 U.S.-China Business Council report found that the trade war with China reduced U.S. economic growth and resulted in an estimated peak loss of 245,000 jobs.

And let's not forget: no country is an island. During the Great Depression of the 1930s, one country's high tariffs intended to protect its businesses and farmers unsurprisingly led to retaliatory tariffs from many other countries. This ultimately resulted in a general increase in global tariff rates, triggered a currency war, damaged world trade as a whole, and hindered economic growth worldwide.

Today, people around the world are watching to see if any major economy will repeat that history. Global trade in goods already experienced a rare decline last year, and future missteps could take a toll on us all. The International Monetary Fund's First Deputy Managing Director, Gita Gopinath, warned that should there be "some very serious decoupling and broad-scale use of tariffs, you could end up with a loss to world GDP of close to 7 percent."

Since tariffs only exacerbate the problems they are allegedly intended to solve, in whose dictionary exactly are they the most beautiful word?

Tariffs do have one obvious benefit: diverting the blame. Your products don't sell because foreigners are cheaper. Your wages stagnate because foreigners are making money. In other words, it's all someone else's fault.

Apparently, taking it out on some alien is easier than crafting and consistently carrying out sound policies to improve employment, make the country safer, and address the roots of public discontent. Taxing foreigners is more politically convenient than possibly offending vested interests.

There is a millennia-old Chinese idiom called "drinking poisonous wine to quench thirst." It means short-term gains will lead nowhere without consideration for long-term consequences. Tariffs may garner votes for now but will eventually make the vast majority of honest, hardworking people worse off. May the voice of the silent majority be heard.

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