Photo courtesy of Mallary Helmig.
President Trump has threatened tariffs on the United States’ three major trading partners; China, Canada, and Mexico, and St. Ambrose University students are left to wonder what this means for them. The Buzz asked SAU faculty members to explain the implications these tariffs may place on students’ daily lives.
“Tariff is a tax. Like we pay taxes for goods, services, and groceries, it is the same, but just for international trade, however, the burden of this tax eventually is imposed on consumers,” explains an SAU finance professor, Dr. Mazumder.
“You don’t have to be an economist to understand it. If I impose you taxes, it will affect your budget and harm you financially.”
“I’ve definitely heard of the tariffs being placed, but honestly, I don’t really know what they mean or what they do,” says student Ellie Mooney, a junior at SAU.
Some SAU students agree with Ellie’s confusion regarding the tariffs imposed just after midnight on February 4th. The imposed tariffs, which are 25 percent for Mexico and Canada and 10 percent for China, were placed to, as what President Trump says, stop the influx of fentanyl and illegal migrants into the country.
Dr. Wang, another SAU finance professor, further explains that, “if a business in the U.S. wants to import goods from China, Mexico, or Canada, in this case, the U.S. government has imposed tariffs on those goods. Those importers need to pay extra taxes to the U.S. government.
“Those taxes are imposed on and collected from the importers, so based on the U.S. business here, in order to survive and make money, they may have to raise prices and pass part of, if not all, of the taxes to consumers. Eventually, the consumers will pay higher prices.”
Dr. Mazumder provides an example of cherry tomatoes which students at the SAU Cosgrove salad bar, “We bring a lot from both Mexico and Canada. If we impose tariff on tomatoes, prices of imported tomatoes will go up here. But do you think that the local producers will sell their tomatoes cheaply? Usually, no as they will also increase the prices because the demand for local tomatoes will go up. Eventually we would see an increased price for tomatoes (negative effect) along with some domestic job creations (positive effect). However, which effect dominates the other is still unfolding.”
“If it continues, like 25 percent tariff on Canada and Mexico and even 10 percent tariff on China, several estimates exhibit that on average, each U.S. household will probably spend an extra $1,500 to $2,000 per year.”
As Dr. Mazumder explains, if the tariffs imposed on China as well as the tariffs placed on Canada and Mexico, which were halted for 30 days very shortly after being imposed, continue, students should expect to see higher prices for daily life.
“If you look at the history and recent trend, China, Mexico, and Canada are our biggest trading partners, like more than 45 percent of our total global trade is with these three countries,” says Dr. Mazumder.
“I don’t know what happens after the 30 days, but definitely it’s going to be hard one way or another because we are dependent on those countries for fresh vegetables, fruits, energy products, lumber, automotive, TV, PC, among others.”
Some of the other goods the United States depends on China, Canada, and Mexico for are; medicines, shoes, steel, other electronics, chips, tequila, petroleum, and much more, according to the New York Times.
Some SAU students may still wonder, how long before we see the results of the tariffs. Dr. Mazumder says, “I would say, there is probably some lag effect. Some products, like fresh items, are probably coming more often than home appliances.
“I would say, we would see some effect immediately, but some maybe later, if it happens.”
Dr. Wang says not much can be done to avoid feeling the effects of the tariffs. However, “we have options to choose either buy this or maybe not.”
