American policies and international affairs are set to undergo significant change. Donald J. Trump took office for his second mandate, and some of his promises are striking. Shortly after being elected, Trump imposed 25 percent tariffs on goods from Mexico and Canada and 10 percent on goods from China – a number that was recently raised to 35 percent. The European Union has been mentioned as another potential target in the last few days.
The tariffs aim to protect the USA by imposing them as some sort of sanctions for the encompassed countries. Tariffs are intended to serve as a threat or punishment for the immigration flux coming from Canada, the drug trafficking coming from Mexico, and the EU-China commercial relations. However, there are also potential adverse effects for Americans that must be addressed.
The most likely scenario regarding these tariffs is that the targeted countries retaliate by exporting less for the USA and that prices rise. This can cause strong disruptions in the supply chains of several sectors, as Canada, Mexico, the EU, and even China are among America’s most significant commercial partners. Products essential for many people’s everyday lives, such as medical devices and vehicles, may become less available, less quality, and more costly. Building a car or developing a health product often requires specific parts or machinery from abroad. American car brands such as Ford, Tesla, or Chevrolet and health companies such as Medtronic, Abbott, and Johnson&Johnson use materials coming from all of the countries targeted by Trump’s desired tariffs. This being said, such a policy should be revised before being put into practice, as it can cause a change for the worse by forcing popular providers to entirely reinvent themselves and their production and leading consumers to let go of products that have a daily utility for them.
If the impacts of tariffs can negatively affect big companies, they can be even worse for smaller entrepreneurs. Smaller entrepreneurs are even more likely to struggle with supply chain disruptions, as they may have fewer resources to adapt. Once again, if this policy affects smaller entrepreneurs, it should be revised. All the greater entrepreneurs and innovators came from somewhere. Many of them had humble beginnings – giants like Apple, Microsoft, or Google had their start in garages. A supply shortage may discourage and even prevent several creative minds from moving forward with their projects.
Another aspect that should be kept in mind is the possibility of tariffs affecting not just imports but also exports. When countries sell, they also expect to buy – because that is how trade works. The Trump administration should expect the targeted countries to reduce their interest in importing from America. Such will affect the demand for materials like machinery, aircraft, and nuclear reactors, which will undoubtedly not incentivize investment or innovation. Business people and developers want to expand their influence and network, not keep it only inside the borders.
Nevertheless, there is still hope. Threats can be turned into opportunities if things are done smartly. Supply shortages mean difficulties, but difficulties mean opportunities to reinvent. Tariffs can prevent some materials from entering the USA, but they do not control the access to information and the exchange of ideas between individuals. Entrepreneurs have the chance to identify alternative trade partners that demonstrate promise, search for inspiring examples, and think of new ways to make their products or services work. A cautious and comprehensive analysis can open the door to groundbreaking options that have not been considered.
Tariffs are coming to give Americans a fight, but entrepreneurs and innovators still have the chance to fight back.
* Beatriz Santos is the Chief Communications Officer (CCO) at We Are Innovation. She is based in Lisbon, Portugal. Beatriz started publishing articles through her University newspaper and eventually moved to national and international reach outlets, including the well known Portuguese outlets NOVO and Observador. Her professional career includes international communications experience with the ATREVIA agency and the European Parliament. She also has two published books and is an essential part of the Students For Liberty organization in Portugal. With a focus on positive change and global cooperation, Beatriz actively seeks partnerships across the globe to promote innovative initiatives.
Source: We Are Innovation
