Missouri's economy faces ramifications from possible Mexico tariff

1 year 2 months 3 weeks ago Friday, January 27 2017 Jan 27, 2017 Friday, January 27, 2017 6:05:00 PM CST January 27, 2017 in Top Stories
By: Matt Vereen, KOMU 8 News Reporter
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COLUMBIA – With the idea of a tariff on Mexican imports being discussed by President Trump’s administration, Missourians are beginning to wonder at the possible economic impacts on their local community.

Mexico is a major source of imported goods into Missouri, standing at 2nd on the list behind Canada. The types of goods imported vary greatly and span from cars to agricultural products and machinery parts.

Saku Aura, an Associate Professor of Economics at MU, said tariffs run the risk of breaking down the system of global trade and often lead to retaliatory trade actions. While the global economic system has problems, Aura added that most economists agree selectively setting tariffs will mainly hurt the taxing country in the long run.

“Generally I would say you would say you would be very hard pressed to find a single economist who would want to start increasing tariffs for whatever purpose it is,” Aura said.

According to Aura, the tariff would result in higher prices for Mexican products, making them less competitive in the U.S. market. He predicts domestic products would replace some, but most consumers would instead turn to products imported from other countries. Some more complicated products like cars, though, would be harder to replace.

Some local consumers fear the prices on goods would be unavoidable, shifting the economic burden onto the U.S. population. Jerry Thompson, a resident of Columbia, says he thinks the tariff is a bad idea.

“It will irritate the Mexican population and will upset the travel between our two counties. It’s just a generally poor idea and it’s a knee-jerk idea by the President,” Thompson said.

The main argument in favor of the tariff would be to avoid taxing the American taxpayer for the proposed Mexican border wall, but there is no arguing the tariff would still have serious costs for American consumers. Aura says some price hikes on Mexican goods would be tough to avoid and retaliatory measures by Mexico could hit American exporters hard.

“It would be bad news for a lot of producers, but the bigger issue is that products that we used to import become more expensive,” Aura added.

How seriously the Trump Administration is considering the tariff is unknown. President Trump signed directives to build the wall on Thursday, but the source of payment for it is still up for debate.

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