Tariffs, a tax on imports from foreign countries, have constantly been used throughout history by politicians to preserve jobs, raise revenue for the government, and for issues of national security. Most of the reasons politicians give to justify tariffs are flawed. There are very few cases in reality where tariffs would be justified, and politicians, such as Donald Trump, who are eager to impose tariffs on other nations will ultimately negatively impact their own country’s consumers.

Free trade between nations is one of the reasons for the massive economic growth of nations. By producing products in other countries where it would be more efficient and importing them, a country’s labour force can focus on producing other products. Some countries will have an absolute advantage over another country when it comes to producing a product. An example is that coffee beans are not grown in the UK as the environmental conditions of other nations, such as Brazil and Columbia, make it easier to grow them there. By freeing up the labour force from having to grow coffee beans, coffee beans can be imported from these other nations, and the labour force can instead focus on producing other products.

However, even if a country has an absolute advantage over another country when producing everything, the country will still benefit from importing products from a country where they may be produced less efficiently. If country A is 2x more efficient at producing apples than country B and 1.5x more efficient at producing oranges than country B, it is more efficient for country A to focus its efforts on apples and import oranges from country B, as it will result in more overall apples and oranges produced.

By restricting free trade, a country will have to produce a product that would be far more efficient to import. While tariffs do not directly restrict free trade, the added tax that some companies might have to pay could cause them to decide to stop selling to countries that impose tariffs as it may be economically beneficial for these companies to export these products to other countries instead – countries where they don’t have to pay an added tax. Due to this, the country imposing the tariff will now have to produce the product within the country when it would’ve been more efficient to import it, reducing economic growth. Companies in the country that is imposing the tariff will also have reduced competition, which will reduce innovation.

Most companies will still continue to sell the product in the country that has imposed the tariff. However, because their costs have now increased due to the extra tax they have to pay – this will get pushed onto the consumer by raising the price of their product. This is usually the aim of a tariff as there are various reasons as to why politicians want to raise the price of products from foreign nations, as previously stated.

One of the main reasons tariffs have been imposed in the past is to protect jobs within the country. During the rising unemployment of the Great Depression, President Herbert Hoover signed the Smoot- Hawley Tariff Act of 1930, which increased tariffs on imported goods. Due to this, other nations also imposed tariffs in response. This ultimately led to the worst economic disaster in history. Even though tariffs could potentially prevent people from losing their jobs, the economic consequences can be so severe that they far outweigh some people becoming unemployed. There are a lot of instances in history when an industry is being outcompeted by foreign products, leading to many people becoming unemployed in a specific industry. Politicians have frequently exploited this and imposed tariffs on competing foreign products, causing them to cost more so that they can’t compete with the domestically made product. Due to this, the industry most likely stayed alive, and people kept their jobs – leading to the politician gaining votes from these people. The result of this is that an industry is using up time and labour that would be more effective elsewhere. When people lose jobs, it is usually because their labour is not as productive as it could be, and they could be more productive elsewhere. By imposing policies to help individuals in an economy to keep their jobs, the government is allowing them to work where they wouldn’t be the most productive, which will have a negative effect on society as a whole.

The main way a government raises money is through taxing its citizens. If the government wants to raise more money, it could increase the tax paid by its citizens. The issue with this is that increasing taxes will anger the nation’s citizens, losing many votes. To overcome this, politicians usually just print more money instead. This way, the negative effects on the economy are not initially as visible to the nation’s citizens. Like printing money, the negative effects of imposing tariffs on foreign products are also not initially seen, so governments can also use tariffs to raise revenue. Both printing money and tariffs will usually cause worse issues in the long run as they will lead to inflation, which will devalue everyone’s money. Using tariffs to raise revenue will have more harmful side effects compared to printing money, as both will cause inflation but tariffs will also cause other issues such as decreased competition and reduced economic growth. Governments should cut spending as much as possible, but if they have to raise money, the only way it should be done is through taxation and, on very rare occasions, by printing more money. Governments should never use tariffs to raise money.  

One of the valid reasons for imposing tariffs could be issues of national security. If a country imports a lot of products from an enemy country, the enemy country could have the power to collapse the country’s economy overnight by restricting trade. This could obviously be disastrous and could be a potentially valid reason for Trump’s tariffs on China. A country may also want certain products, such as weapons, to be produced within the country as a precaution against being unable to import them from elsewhere during critical times, such as war. Even though these are valid arguments for the use of tariffs, the benefits of using tariffs in these scenarios should still be weighed against the drawbacks to decide whether to implement them.

Using tariffs as a threat could be justified in a negotiation with another nation. A recent example of this is Trump using tariffs to threaten Columbia to accept their citizens that are being deported. As a trade war would hurt Columbia far more than it would hurt America, Columbia capitulated. Tariffs will always negatively affect both nations, but when one nation is significantly less affected than the other, it can use the threat of tariffs as a bargaining tool to successfully achieve its objectives.

The majority of reasons that tariffs are used, such as preserving jobs, raising income, and issues of national security, are far outweighed by their negative consequences, such as reduced economic growth and inflation. Even though they have been incredibly disastrous throughout history, politicians will continue to use tariffs as it will allow them to win over the votes of a small subset of the population that want to keep their jobs – even though this will always have a negative impact on the economy as a whole.