Trump Tariffs Disrupting Tech Sector

One thing we know about President Trump is that he likes winning. When he was running for office, he joked that under him Americans would do so much of it that we’d get “sick and tired of winning.”


It wasn’t just rhetoric. He first worked through his agencies and with Congress to call back some of the Obama Administration’s most burdensome regulations, creating a sort of deregulatory stimulus. He also championed and signed a huge tax reform package, bringing America’s sky-high tax on businesses down to a point where our companies can be more competitive with the rest of the world.


These moves came on top of an economic recovery that was long but sluggish, and they supercharged it. In 2018, Quarter 2 saw 4.1 percent growth in the economy. Compared to where we had been, that’s on fire.


But now, President Trump’s trade policy threatens to grind this great economic achievement to a screeching halt.


Complaining of bad deals and poor practices of foreign competitors, President Trump has started a trade war with several countries by imposing high tariffs on imported aluminum and steel and other goods. Other countries have followed suit by erecting tariff barriers on a range of goods coming from America.


Farmers were hit so hard that the Department of Agriculture made available $12 billion in relief to offset their losses. Another sector that is being particularly hard hit is the tech sector.


That’s because a good number of American tech companies both trade and manufacture some goods in China. The president unilaterally made it harder for them to do both of those things in his struggle for a better trade deal.


Trump clearly believes he’s doing the right thing for Americans, but at the same time he can see that his policies are doing some unintended harm. Notice that he made available money for farmers after countless stories of crops rotting in fields rolled in.


Here’s hoping he realizes just how bad his policies are for the tech sector as well, which made up about five percent of the economy last year, adding $931 billion to our GDP. Moreover, it was growing at a breakneck pace of three times the overall GDP. Threats to America’s tech growth is a big danger to the Trump Economy.


The hazards are both short term and long term. The tariff warring places added costs on American businesses, and those costs then get passed on to consumers. Rather than focusing on innovation, tech companies are forced to waste untold hours trying to find ways to deal with the tariffs and minimize the impact on their bottom lines.


At the same time, foreign competitors are taking advantage of these disruptions to our companies’ supply chains to bolster their own market positions. This threatens to do long-term harm to our economy, especially tech companies, and risks the U.S. losing its competitive edge.


That’s not winning, it’s losing, and potentially on a massive scale. If this continues, the prices Americans pay for goods will rise and economic growth will slow. Studies suggest that it could cost us hundreds of billions of dollars in GDP and hundreds of thousands of jobs.


Mr. President, surely there is a better way to improve trade deals.


Katlyn Batts is the Chairwoman of the Wingate University College Republicans and an employee of the Jesse Helms Center.