Trump's economy is booming — repealing tariffs will boost it even more

Trump's economy is booming — repealing tariffs will boost it even more

You have probably heard the saying “If it ain’t broke, don’t fix it.” 

That saying could be applied to our economy right now. In this regard, it seems that President TrumpDonald John TrumpTrump says he will 'temporarily hold off' on declaring Mexican drug cartels as terror organization House Judiciary Committee formally receives impeachment report Artist behind gold toilet offered to Trump sells banana duct-taped to a wall for 0,000 MORE can do almost no wrong, with the Dow and S&P 500 hitting all-time highs in July, job growth continuing to exceed expectations, and unemployment at a 50-year low.  

The catalyst for this booming economy can be found in the president’s regulation slashing early in his presidency and his signing of the Tax Cuts and Jobs Act, which put more money back in the hands of American companies and families. 

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But coupled with all of this great news is a dark cloud looming on the economic horizon: tariffs. The good news is that the president has the authority to stop this dark cloud from turning into a massive storm that derails all of the great gains we are seeing in our economy. 

Tariffs are taxes paid by American businesses and American families. Beginning in January 2018, Trump began enacting tariffs on a variety of goods coming into the U.S. from certain countries, including some of our biggest trading partners like Mexico, Canada, and China.

In response, some of these countries enacted their own retaliatory tariffs targeting some of our nation’s most important industries. One example is China, which has implemented retaliatory tariffs on $94 billion worth of American exports. 

All of these tariffs are already causing strife for many American farmers, businesses and families. The retaliatory tariffs from China have acted as a double whammy for farmers who have already been hit with floods, fires and other natural disasters like hurricanes that have impacted their crops. And while the president has offered assistance to farmers and has said this aid has helped them, the facts – and in some cases, farmers themselves – have said the aid isn’t enough to truly counteract the negative impact of the tariffs.

Look at Ohio, a state critical to Trump’s 2016 election, and where the president will be visiting this weekThe Columbus Dispatch recently reported that $830 million in agricultural exports to China were in jeopardy. And with soybean prices falling nearly 20 percent in June alone, farmers in Ohio are feeling the heat. One farmer told the Dispatch he had already lost $200,000 on soybeans and that he stood to lose another $200,000 on corn. Farmers often operate on small profit margins, so a massive hit like that could force many out of business altogether. 

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Another example is the agriculture heavy state of North Carolina, where tobacco farmers largely export their crop to China. So how have the retaliatory tariffs affected them? They have seen a 98 percent decline in exports to China. Hog farmers in the state are also worried about the possibility of China canceling more pork orders.  

China has now begun buying soybeans from other countries, and many farmers are wondering whether or not they will even be able to regain access to the Chinese market once the trade war has ended. If they can’t, the tariffs will do long term damage and leave American workers in the dust.

This is a typically overlooked cost of tariffs for American businesses: that supply chains take time to build—and you can’t just plug right back into one overnight. These supply chains require relationship building and trust, something that could be lost for good if the tariffs are in place for too long. Don’t believe me? Dairy exports to China have fallen 43 percent since the tariffs were enacted, but Chinese imports of dairy products are up 13 percent. To put it plainly, China has found other countries and supply chains to suit their dairy needs. It will be tough for American producers to get back into the Chinese market and rebuild trust and relationships once the tariffs inevitably are repealed.

In the 18 short months since the tariff back and forth began, tariffs have cost the American economy close to $50 billion, and are projected to cost another $1.4 billion each month. If the 25 percent tariff goes into effect on the additional $300 billion in Chinese goods, that number will go up dramatically. And that does not include the recent threats of tariffs against India, Thailand, the European Union and others. 

Most of President Trump’s economic policies have created the environment for our booming economy and put the economy on a solid foundation for the future. He should be applauded for pushing back against countries like China that have taken advantage of us and hurt American businesses with their bad practices.

But tariffs won’t fix these problems. If Trump repealed these tariffs, it would strengthen our economy, help ensure his reelection in 2020 and cement his legacy as one of America’s greatest presidents.

Scott Metzger is president of the Ohio Soybean Association and director of the American Soybean Association.