Look around your home and you’ll likely find products that were made in at least a dozen different countries. Some items you purchase on a regular basis, such as food. Some are a one-time purchase like furniture. You buy these items for a variety of reasons. But in general, they make your life better and contribute to U.S. citizens enjoying one of the highest standards of living in the world.
The tariffs recently introduced by the Trump administration will increase the cost of many of these items. There is little debate about that though the amount of the increase for a particular item could be debated. Presumably the end result is to strengthen the American economy. By raising the price of imports, American manufacturers will become more competitive and manufacturing in the U.S. will increase. That may or may not happen in the long run. But in the short run, you and I will pay more if such tariffs stay in effect.
My first job out of college was with a furniture manufacturer in Fort Smith, AR. Riverside Furniture had six plants producing wood and upholstered furniture sold across the U.S. and beyond. There were roughly 1,400 employees producing quality furniture at affordable prices for middle class America. Other businesses in town supported the production at Riverside. A local wood products company made the turnings for our tables. A glass plant produced tabletops. A foam plant produced cushions, and so on. Besides Riverside, there were half a dozen other furniture manufacturers in town.
Beyond the furniture plants, Fort Smith had a couple of plants making air conditioners and a Whirlpool plant making 5,000 refrigerators a day, with 5,000 or more employees. Whirlpool began moving production to Mexico in 2003 and completely shuttered the plant by 2012. The Riverside plants have also been closed for years. Why? Because these products can be produced at less cost outside the U.S. And you and I as consumers want maximum bang for our buck!
Supposedly the tariffs will level the playing field, i.e., make us more competitive in world markets. But don’t expect Whirlpool or Riverside to restart those factories for several reasons. First, since they were announced, there have been several adjustments as to timing of the tariffs as well as to the percentage level of tariffs. That creates uncertainty and businesses aren’t likely to invest tens of millions of dollars under those conditions. Second, we will have a new administration in less than four years. Would a new administration continue the policy? The U.S. has a history of leaning toward free trade, not restricted trade. Finally, if Whirlpool did decide to move production back to the U.S., where would they get the workers?
The U.S. stock market has registered its opinion about tariffs, dropping into correction territory since the announcement. Fox News, controlled by the Rupert Murdoch family, has endorsed the tariffs. Yet the Wall Street Journal, another Murdoch property, called the tariffs “the dumbest trade war in history!” How’s that for diversity!
Several years ago, I went back to Fort Smith to the Riverside Furniture outlet and bought an office desk and credenza. Both pieces were made in China. The quality was excellent, and the price was surprisingly affordable, even after shipping it all the way from China. That’s the value of international trade. And you and I prove it every day by our purchases.
