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Trump’s Tariffs will hurt

Alexandra Stevenson, the author of the article, has discussed in detail the impact of levying tariffs on Chinese products. Particularly, President Trump has levied tariffs on the Chinese products thereby deteriorating the trade war between China and the United States. As a result, it has increased pressure on many companies in the US to abandon China and establish operations in other countries such as Cambodia, which have a low population with people earning low wages but very optimistic. In other words, the tariff on Chinese products will force companies such as Puma and Steve Madden to shift their production from China.

However, it may be difficult for most companies to quit the Chinese market. First, China has a well-developed infrastructure. From reliable roads to dependable rails linking suppliers and assembly plants to port, and reliable workforce who efficiently hold factory jobs. Unfortunately, neighboring countries such as Vietnam and Cambodia conversely do not have reliable infrastructure and workforce. In other words, countries will have to train workers as well as invest many resources in infrastructure. Will this be possible for the shifting companies?

My reflection on this article is that it may be difficult for the companies to shift from the Chinese to other unfavorable countries. Why do I say this? Because the import tariffs on Chinese products will lead to increase in prices of those products. Consequently, demand will obey its law, and the outcome will be reduced sales and ultimate revenue. Suppliers will be discouraged and will reduce the number of supplies to the US. Meanwhile, as Puma and the fellow companies plan to shift their production to other countries, their consumers may suffer greatly back in the United States.

Another fact is that tariffs do not only affect consumers and businesses in China. Consumers, as well as business from both countries, will feel the pinch of tariffs. For example, by placing import tariffs on China-manufactured products, prices of these products will definitely shoot in both China and the United States. The consumers, therefore, will have to spend more of their income and save less. When consumers in the United States start dissaving, that is, consuming more than they save, there will be reduced investments in the country. Decreased investment is an indicator of economic regression, something that I presume the President may not support. My stake on this topic is that all the economic agents including households, firms and the government should derive ways of becoming nation’s savers rather than consumptive nation by using other substitutes of import tariffs such as quotas.

Work Cited

Stevenson, A. "Trump’s tariffs may hurt, but quitting China Is hard to do." 24 Sept. 2018, www.nytimes.com/2018/09/24/business/china-tariffs-manufacturing-cambodia.html.