People everywhere share frustration over high prices. Combating those high prices was one of President-Elect Donald Trump’s campaign promises and a reason that many elected him into office.
Trump vowed to place a 60% tariff on imported products from China and a 10% tariff on imported goods from other countries. A tariff is a tax on products coming into a country, in this case, the United States.
Dr. Brian Tietje, the Dean of the College of Business at Texas A&M University-Corpus Christi, said depending on those tariffs could potentially raise prices on certain products for people locally.
“A lot of this will have to wait and see how it plays out,” Dr. Tietje said.
A few different possibilities can happen if a tariff is imposed.
“The products would be routed to other countries, say Vietnam. If the products come from Vietnam then they aren’t charged the tariffs coming from China,” Tietje said.
The events of 2016 can also serve as a possible indicator of what could happen this time around.
“For example, countries can also change the value of their currency so they can make their products more affordable,” Tietje said.
Some tariffs that were applied on goods when Trump was president are still being applied right now. Common goods people in the United States get from China are things like cell phones, electronics and machinery.
Trump said adding these tariffs will cause manufacturers to come back to the U.S so products we buy overseas become local. Resident Alicia Romero said she is all for that idea.
“It’s creating more jobs instead of sending people to work outside. If he brings people over here, it will help on the immigration subject by exporting people here legally and gaining money,” Romero said.
But Dr. Tietje said a third possible scenario from adding tariffs is competitors might try to match prices. Resident Jeremy Chassagne said that possibility worries him and thinks it will increase prices as a whole.
“We’re going to end up in the same place we were before. Even though Trump is trying to do the right thing by jump-starting the economy and producing more things here in this country, I think company greed is going to take over and do what they always do which is make profit,” Chassagne said.
Dr. Tietje said it is too early to tell if we will see any type of inflation, but it will all come down to basic economics of supply and demand.
