Tariffs and the Trade War

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BRYAN, Tex. (KBTX) - Trade talks between the United States and China are expected to dominate the G20 Summit being held in Japan this week. And since U.S. Agriculture has a huge stake in the discussions, we thought it would be appropriate to take a closer look at what triggered the almost year-long trade tensions between the United States and China. Joe Outlaw is a Professor and Texas A&M AgriLife Economist.

“Think of it as a tax, and basically when we have these tariffs put on our products, it says you can sell your products to in this case Chia or other countries, but when it hits our port, it’s gonna cost the people who are buying it, in most cases with most of the tariffs twenty five percent more. So you think of it as a twenty-five percent tax on our products.”

Historically, Outlaw says that other countries have had more obstacles to U.S. products coming into their countries than the U.S. does.

“The U.S. has the lowest system of tariffs of any country, import tariffs, of any country in the world. What does that mean? We have the most open borders of any country in the world, and that’s a fact and it’s been that way for a long time. So there’s a reason we have imported more from China than we’ve exported. They have more barriers.”

Outlaw explains that the amount of tariffs China places on U.S. products is responsible for the overwhelming trade imbalance.

“We’ve had a number of presidents that have been justified for doing something. This one just did. He decided to do it. We’ve had companies, countries taking advantage of the United States and our generosity for a long time, and while it’s causing pain right now, we hope that it’s all going to be worth it at the end. That’s the hope.”

Outlaw points out that both countries need the trade.

“It’s the same reason why when you go into the grocery store, any time of year you can find strawberries. If we were limited to what we could grow in this country, we wouldn’t have it year round. It’s no different than we want some products that come from China and we want products that come from other places as well. Trade is good. But again I started off with saying there’s no such thing as free trade and what we need to get is fair trade and that is what all of this is about.”