As the U.S. trade war with China rages on, an economist weighed-in about possible long-term repercussions.
According to Florida Gulf Coast University Economics professor Dr. Thomas Smythe, Ph.D., trade wars are unwinnable endeavors,
"Trade wars, from an economic perspective, are a net loss game. Period. End of story," Smythe said. "If there is any type of win, it has to be political because it’s not economic."
Companies that purchase items from China bear the brunt of tariffs whether it be 10% or 25% and eventually those companies will begin to pass their additional cost on to consumers.
"Whether its higher prices or lower production therefore people get laid off, or whatever the result is, it’s really the consumer that takes the heat," Smythe said.
According to Smythe, the irony behind the motivation for tariffs is to bring jobs back into the United States.
"It [tariffs] increases the price of goods here in the United States, therefore we as Americans will turn around and start producing whatever those goods are, which in theory ought to increase jobs in the country," Smythe said.
The problem is, Smythe said much of the infrastructure for domestic manufacturing is no longer present and will take a long time to rebuild, so those jobs are not available and won't be for a long time.
Smythe said it could take generations before some industries are back, and even then, the economy will suffer. If the trade war doesn’t end, Smythe said eventually the U.S. will isolate itself from the global market and will be limited to selling products within its own borders.
"Nobody wins a trade war, least of all the consumer," Smythe said. "I don’t care if you’re Chinese or American, we’ve lost."
