The Long-Term Benefits of Tariffs

Why Tariffs Are Beneficial

You are probably saying there is no way that tariffs can have a positive effect on both parties -  imposing them and those on the receiving end. I encourage you to read this article to the end and you will likely agree with me. We have become accustomed to reading the headlines only, which normally are negative because they are predominant. In order to understand anything, we must look at both sides of any situation. Since the majority of you have already read the headlines on the negative effects of tariffs, I am taking a minute of your time to take you through the positive effect. Thinking for a change, yes, that is what we need to do more of. There is no problem that can withstand the constant attack of positive thinking. Nothing ever comes out of negativity, absolutely nothing. Tariffs give a jolt to the global system of trade and forces companies to take a closer look at their products, processes, systems, technology, people, etc. leading to many positive improvements. Yes, tariffs can be a positive catalyst for change. I am not either for or against tariffs, just looking at the long-term positive side of it. Let’s then think beyond the benefit of short-term increased government revenue. Tariffs are a better way to increase government revenues then to increase the taxes on already overtaxed citizens, especially in a government with over 20 trillion of debt.

Here are 7 positive benefits of tariffs:

1)      Get countries to the table and talk. Either by action or reaction more conversations and negotiations will take place. Trade agreements will be challenged, reviewed, and renewed for better win/win agreements.

2)      More local manufacturing. More manufacturing moving to USA by foreign companies which is good for the US economy as new jobs are created. More manufacturing in local markets like China (Harley Davidson, Tesla recent announcements) which is good for American companies. Local people working together take more pride in what they are doing. Create more jobs and higher wages at home.

3)      More efficient and effective manufacturing. The tariffs make exported products less competitive which forces companies to lower manufacturing costs (requires a complete new look at the current manufacturing systems). A short-term negative can be reversed to a long-term benefit in competitiveness.

4)      Slow the US Economy short term. This is a more effective way of slowing the economy than doing it via increasing interest rates, especially when in a very low unemployment situation like now. In the long-haul economies expand as manufacturing is spread into more countries.

5)      Consumers win on the long term. This happens with increased competitiveness, more options and more innovations. Consumers may pay the price short term while local manufacturing is getting set up for a broader number of products.

6)      Growth in US and Global economies. Remember the auto industry in the 70’s and 80’s. The Japanese ended up building factories in US to avoid import duties and reduce shipping costs. US automakers built factories in many other countries to become more competitive there. Everyone benefited and yes, the consumers did too, especially in many developing countries with more options and lower prices. Besides, the global economy needs to grow at a faster pace and keep on growing to support higher standards of living for more people.

7)      Global peace. Countries that do business together don’t go to war to each other. The movement of people increases increasing the transfer of knowledge and understanding of cultures. The well interconnected business world makes it difficult for countries to wage war with each other.

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Be blessed and be a blessing to others

Carlos Fontana

Author of the book PRICELESS, Co-author of the book Follow to Lead

"Those that take swift action will always leave those that don't breathing the dust"

"The future belongs to those who can see and pursue opportunities before they are obvious"

“Managers influence numbers, leaders influence people by inspiring them to pursue excellence”