Tariffs are taking center stage as President Donald Trump proposes additional tariffs on goods imported from Canada, China, and Mexico. Two Virginia Tech professors explain tariffs, break down arguments for and against them, and discuss how they may impact consumers, markets, and other nations.
is a visiting associate professor and expert on international affairs. is a professor and agricultural economist specializing in trade.
What are tariffs?
Grant: Tariffs are a tax or surcharge on imports coming into a country. In most countries, tariffs are collected at the ports of entry either as a percentage of the import value of the goods entering the importing country or as a per unit surcharge collected on the volume or number of products imported — dollars or cents per unit imported.
Why are tariffs a big push for the Trump administration?
Tsarouhas: There are two reasons. First, the president likes them. He thinks tariffs have the potential to restore America’s industrial prowess, and he is therefore keen to use them to achieve a set of policy objectives, which may not be linked to industrial or trade policy. Two, the president has campaigned on imposing tariffs, and he wants to stick to his pre-election promises to the American people.
How can tariffs be beneficial?
Tsarouhas: Tariffs can shield domestic production in the U.S. from foreign competition and allow for higher demand for U.S. products at the expense of imported goods, boosting employment in key economic sectors. This can then reduce the country’s large trade deficit and assist U.S. efforts to introduce fairer trade practices by discouraging dumping.
Grant: Countries may use tariffs when they have evidence that goods are unfairly subsidized in foreign countries. Tariffs can provide an important source of tax revenue for some countries that may struggle to raise government revenues from other sources.
How can tariffs be harmful?
Grant: So much depends on a variety of factors and questions: current policy objectives, at what levels the new tariffs will be set; do they apply to all countries or just some; how foreign countries react; how governments use or distribute tax revenues; are tariffs long term or short term.
Can tariffs impact U.S. consumers and the economy?
Tsarouhas: Tariffs are likely to hurt the U.S. consumer by making certain items more expensive. They can also discourage innovation and competition, stifling the U.S. economy. Given America’s weight in global economic affairs, tariffs can also be a signal to international markets and turn positive economic sentiment into bad if other states retaliate and a trade war ensues.
How could higher tariffs make a difference for farmers when it comes to market demand?
Grant: A key question around any new tariff announcement is how foreign countries will react. The U.S. is a highly competitive and major agricultural exporting country that depends on foreign market demand for the sale of its farm output.
How could higher tariffs impact the U.S. and its relationship with other countries going forward?
Tsarouhas: Tariffs can concentrate minds and make all sides, the U.S. and other states, more focused on solving problems above and beyond trade. The U.S.-Mexico agreement seems to indicate that this positive spillover effect may be taking place already.
On the other hand, tariffs could undermine U.S. capacity to advance its policy agenda through persuasion and raise suspicions among partners and allies as to the reliability of the U.S. and the legitimacy of its global reach. Tariffs are also likely to undermine global economic prospects, hurting the U.S. and other countries around the world.
About Tsarouhas
is a visiting associate professor and a member of the outreach and engagement committee for the Center for European and Transatlantic Studies at Virginia Tech. He also is head of European Union projects and partnerships and program director for the Türkiye Research Program.
About Grant
is the W.G. Wysor Professor of Agriculture and Director of the Center for Agricultural Trade at Virginia Tech. He has built an internationally recognized program in agricultural markets and trade at the university.
To schedule an interview, please contact:
Margaret Ashburn, [email protected], 540-529-0814
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