Leaning on Economics Sanctions: What are the Consequences for the United States?

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In recent history the United States has been increasingly using economic sanctions as a vehicle for change in other countries around the world. Whether the reason for the sanctions was selfish or moral, the reasoning always included consequences for the country. But what about the United States? This article will summarize the backlash and consequences that the U.S. has encountered as a cost of their modern, reckless use of economic sanctions. Most notably, the Trump Tariffs of 2018 and 2019 on Mexico, Canada, and China. 

Former President Trump campaigned on the slogan “Make America Great Again;” he followed through on that slogan by placing tariffs and sanctions on our closest neighboring countries, Canada, and Mexico. The reasoning for these tariffs was bringing work back to the United States, though this motivation ultimately failed. What resulted from these sanctions of the aluminum and steel industry was retaliatory sanctions on U.S. exports such as whiskey, maple syrup, paper, plywood, and many other agricultural exports. This was a harsh hit to those industries in the U.S., especially to small-scale farmers and those run by minorities, who rely on proximity exports to sustain their business. 

Perhaps the most significant consequence of the U.S. economy though, comes from the ongoing trade war with China. Trump turned his protectionist policies towards China in 2018 when he announced tariffs on 250 billion dollars’ worth of Chinese goods. This substantial number could not be ignored by the Chinese government, who responded with tariffs on U.S. products that amounted to 120 billion dollars. Economists Mary Amiti, Sang Hoon Kong, and David Weinstein reported to Forbes that this trade war and escalating sanctions is resulting in much more devasting consequences than originally estimated. They cite their research Forbes, saying quote, “…the new analysis suggests that the tariffs’ impact on productivity is likely to be a factor holding down U.S. growth rates. The tariffs protect the least efficient firms and reduced their incentives to innovate while hurting the most successful U.S. firms, reducing their ability to innovate.” Their research findings showed a 10.43% decrease in U.S. stock market returns, resulting from various announces from the White House on new sanctions, as well as a 7.8% decrease in U.S. consumer well-being, over the research period (January 2018-August 2019). They predict that this is only the beginning of the effect on the United States. 

As stated previously in this series, to be successful, economic sanctions not only need to have a solid reasoning and a moral heading, but they need to be supported by more than just one nation. This is what would motivate the target nation to change. The motivation behind the Trump tariffs on Mexico, Canada, and China was to bring work back to the United States and to position the U.S. to enter more beneficial trade deals. The true result was much different. What is found here in this piece is that the United States has not been able to avoid consequences for their irresponsible use of economic sanctions. 

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