[Op-Ed] Trump’s Tariff Measures Will Harm the U.S. Economy in the Long Run

Strengthening trade barriers increases instability in global supply chains and imposes greater cost burdens on businesses

Free trade enhances economic efficiency and gives consumers more choice and lower prices

National competitiveness must be strengthened by enhancing industrial competitiveness, fostering the digital economy, and advancing environmental and sustainability policies

As U.S. President Donald Trump announced new tariffs on imports from Canada, Mexico, and China, the affected countries signaled a strong response. Although some of the tariff measures were later adjusted again, global trade tensions are still expected to intensify.

International financial markets were immediately jolted. Global stock markets fell, demand for safe-haven assets increased, and oil prices rose. This reflects investors’ concerns over growing economic uncertainty and a slowdown in economic activity. However, a more serious issue than the market’s short-term reaction is the structural change these protectionist measures will bring over the long term.

As trade barriers rise, global supply chains are also being shaken. Companies are being forced to relocate production bases or restructure supply chains, which could lead to higher production costs and lower efficiency. As a result, the strengthening of trade barriers not only increases instability in global supply chains and causes greater cost burdens and production inefficiencies for businesses, but also acts as a factor that hinders international cooperation and innovation across industries. This will have worldwide ripple effects that go beyond a conflict simply among the United States, China, Canada, and Mexico.

The U.S.-China trade war, which began in earnest in 2018, dealt a serious blow to the global economy. At the time, the Trump administration imposed steep tariffs, citing China’s unfair trade practices, and China responded with retaliatory tariffs. As a result, some U.S. manufacturing industries appeared to be protected, but companies faced higher production costs and consumers were hit with rising prices, while agricultural exports also suffered heavily and had to rely on government subsidies. This vicious cycle eventually led the Trump administration to pursue the Phase One trade deal with China, but only after considerable damage had already been done.

Likewise, these latest tariff measures, which undermine the principles of free trade, are expected to have long-term negative effects on the U.S. economy as well. Imposing tariffs in a way that disregards international trade norms undermines the basic principles of free trade and makes fair competition more difficult. In the short term, they may protect some industries, but in the long run it is clear that they will also harm the U.S. economy. Rising inflationary pressure caused by higher import prices, reduced consumer purchasing power, and weakened competitiveness in export industries are all expected, while retaliatory tariffs from trading partners will also reduce U.S. companies’ access to overseas markets.

A similar case can be found in the 1930s, when the United States enacted the Smoot-Hawley Tariff Act during the Great Depression, helping to deepen the Depression and contract global trade. In response, countries actually imposed retaliatory tariffs, protectionism spread, and the recovery of the world economy was further delayed. Ultimately, the decline in international trade created a vicious cycle that further worsened rising unemployment and economic recession.

Protectionism can weaken business competitiveness, limit consumer choice, and cause higher production costs and rising prices. In the end, this will reduce the efficiency of the economy as a whole and negatively affect long-term growth as well. Therefore, rather than relying on protectionism, it is more desirable to raise national competitiveness by enhancing industrial competitiveness, fostering the digital economy, and advancing environmental and sustainability policies. Now more than ever, the international community must recognize the importance of cooperation and dialogue and join forces to ensure the stability of the global economic system.

Free trade may not be a perfect system, but it has been the most effective driving force for economic growth and prosperity in human history. Free trade offers advantages such as improving economic efficiency, giving consumers more choices and lower prices, and promoting innovation. It also strengthens economic interdependence among countries, thereby promoting peace and cooperation. Resisting the temptation of protectionism and maintaining an open and cooperative international trading system will serve the interests of all nations. This is the time to avoid being misled by short-term disruption and to choose the path of long-term, sustainable prosperity.

History repeats itself. Attempts to deny the achievements of global economic growth created by free trade and return to protectionism have ended in failure in the past as well. Without forgetting these lessons, maintaining a free and open trading order is a choice we all need to make for a better future.

Yedam Lee, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [칼럼] 트럼프의 관세 조치, 장기적으로 미국 경제에 악영향

Author: Ye-dam Lee

Date: 2025-02-25

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&idx=27368