With the G7 summit over, the rhetoric on tariffs is far from it. More than a war of words, tariffs are real as each nation prepares to respond. Tariffs are simply taxes on certain goods coming into another country. The buyers of selected imports will pay the imposed percentage on the amount of the purchase, and the added costs are passed on mostly to consumers.
Although there is some debate on the value of tariffs, many economists believe they are harmful to industry and consumers. Many agree that China has been taking advantage of the U.S. More criticism goes to the lack of intellectual property protection, and China using this opening. However, rather than imposing tariffs, forming multinational coalitions to address China or other trade imbalances is a better strategy, some believe. Working through the World Trade Organization is another option. However, the current administration does not have an appetite for coalitions or global organizations.
While the political noise between President Trump and leaders of other nations is loud, business leaders are relatively quiet. Some congressional members are beginning to raise their concerns. Interestingly, when FDR was president, Congress transferred trade matters to the president.
Who has been raising their business voice? The Steelworkers Union supports the tariffs, along with the AFL-CIO (although they don’t like the impulsive negotiating tactics). The National Pork Producers Council and the U.S. Apple Association say the timing is not good for their industries. Add in the Distilled Spirits Council as stating the tariffs will harm the hospitality sector. The American Chemistry Council says the tariffs will be punishing, and they represent companies like 3M, Procter & Gamble, DuPont, and ExxonMobil.
The U.S. Chamber of Commerce and the National Retail Federation also voiced their concerns. While the U.S. Chamber says the tariffs could threaten 2.6 million U.S. jobs, the National Retail Federation says the tariffs will negate any advantage the tax cuts offered.
- Finding specific business leaders or CEOs raising their concerns, support, or opposition to tariffs is challenging. Many are silent right now, passing it on to trade associations and unions.
- Many industries that support tariffs are traditional ones while technology companies would likely prefer better intellectual property protection.
- Leaders from the G7 nations are holding President Trump in check, but it will lead to a battle of raising tariffs. Most employees and consumers do not win in these battles.
Activators Quest & Actions (Q&A):
- Are business leaders doing enough in either supporting or opposing the tariffs? Why are they more silent on this issue than others?
- Have you thought about how raising tariffs might impact your business? What will be the impacts in your work and home?
Sources: CBS News, New York Times, National Review, NPR, CNN Money, Newsy, CNBC