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At this point we have all likely heard about tariffs and how president Trump has placed them on every other nation, but what are tariffs? What do they do? What are there pros? The cons? To start off, tariffs are taxes imposed on goods from foreign nations. Most economists generally agree that tariffs are negative for the economy yet can benefit domestic business and industries within the country.

But why are tariffs bad for the economy? Generally speaking, tariffs can prevent countries from benefiting from specialization in trade, meaning that a country that imposes tariffs on trading with another nation will likely not receive goods that the nation suffering from tariffs specialize in making or producing. The worst case scenario for tariffs is a trade war. A trade war occurs when two or more countries try to harm each other’s economy and trade via the use of tariffs. Typically tariffs mutually harm the economy and trade of both nations though some argue that it, trade wars, can protect local industries.

Is there any good that comes with imposing tariffs? Tariffs have the potential to generate billions of dollars for a country’s economy, though this is not a guarantee, and business and industries within the nation tend to benefit. One of the biggest benefits of tariffs is protecting national businesses from foreign competition and encouraging jobs in those industries. Additionally, tariffs can serve as another source of income for the federal government and discourage outsourcing.

At the time of writing, the current imposed tariffs are as follows: China: 145%, Canada: 25%, Mexico: 25%, Thailand: 36%, while most foreign countries have a rate of 10%. But how does this affect the average US citizen? How does this affect the people of Ipswich? How does this affect you? Mr. Mabbot is the current Personal Finance teacher for Ipswich High school and had agreed to an interview on this topic and of how he believes the economy will be affected in regards to what he teaches; he responded with “In the long run there will be little effect on the basic fundamentals of the marketplace. Regardless of what happens, if there is pushback or we become isolationists it will have little impact on what I teach.”

The current events teacher, Mrs. Smith said: “The biggest issue is that it might damage relations with our allies who we always had strong trading relations with. The main idea was to bring manufacturing back to the U.S., but I don’t think that will be the consequence; there are too many outstanding issues.” When asked further about how it would affect how people make a living, she said: “I know it has affected small business owners; there was one story about a woman who works on stationary and personalized things and she had to shut down.” It has affected small businesses that relied on foreign trade already, but outside of that the economic impact on business and industry has been minimal though it does put foreign relations at risk.

But how will this affect students? Should they prepare for the worst? I asked this question to Mr. Mabbot as well and he advised us to invest regardless and that we, the students of Ipswich High School, should “Stay the long course, don’t get distracted by short term volatility, buy and hold. Don’t get distracted by short term issues so you don’t sell out at the wrong time.” But what of older generations? How has this affected or will affect them in the short term? When Mrs. Smith was asked about whether the tariffs have affected her at all her response was as follows “Many people’s 401ks are impacted because the market has been in a free fall since the tariffs; people my age and older are really feeling the effects.” So while our generation does not have much to worry about in the long run, those of previous generations, specifically those reaching retirement, will feel the effects in the short term.

To summarize the information previously stated, tariffs are taxes on foreign goods; they have pros and cons. They protect domestic industries, provide revenue for the nation, and encourage jobs.  Yet tariffs can also discourage trade and could potentially lead to a trade war. And finally, our generation has little to worry about in the long run, yet those nearing retirement may suffer financial damage.