How will U.S manufacturing be impacted by the proposed tariffs?

Ever since the election campaign started, a lot of concerns were raised regarding the future of tariffs in the country. At the same time, many manufacturers were optimistic. Now that Donald Trump has finally been elected as the 47th President of the United States, there are speculations surrounding the tariffs that would be imposed by the new administration.

Manufacturers of all sizes have many questions related to the proposed tariffs and how they would impact the American economy. There are a lot of questions surrounding how the plans will move forward. According to some experts, the proposed tariffs would make things complicated for the manufacturing industry. Also, the tariffs come at a time when the companies are competing for logistics capacity that is under strain, and in the backdrop of possible disruptions to labor supply. Labor shortages are expected in the near future, especially as the new administration plans to send back undocumented immigrants back to their country.

To have a broader view of the matter, it is important to consider President-elect Donald Trump’s previous stint in power. Back then, tariffs of around 75% to 25% had been imposed on imports of Chinese goods. In the current term, the new administration is expected to keep the tariffs at around 60%. Along with this proposal, there are speculations of tariffs being imposed on imported goods from other countries. All these developments may impact different manufacturers in different ways.

One way of seeing things is that if the price of imports is to be raised, then it implies that the tariffs have the potential to protect manufacturers in their country. By ensuring foreign countries have to abide by standards, unfair trade practices can be minimized.

If you go back in history to the early 20th century, when the federal income tax came into effect, the government derived a significant part of its revenue from tariffs. Hence, the tariffs helped run the government financially. In fact, the impact of tariffs was so high that they almost constituted 90% of federal revenue.

However, the global development in the following decades brought out some major changes, as World War II ended and global trade increased, tariffs were no longer being held in importance. If you consider the last few years, American trade policies seem to have undergone changes.

As of now, there are different opinions as to what impact the proposed tariffs would have on the American economy and if they would turn out to be good or bad for the future state of the economy. Manufacturers also echo the same concerns.

It will take some time before the situation regarding the proposed tariffs becomes clear. However, it is still worth noting that the supply chain has had its struggles with such uncertainties. Being used to facing changes, it will probably be able to carve out a solution in the future. Since the current supply chains have the necessary tools and knowledge to demonstrate flexibility when faced with changes, they may be able to adapt in ways that allow them to move forward.