Trump tariffs: US consumers will resent losing access to quality goods

By Mihir S Sharma

 

Donald Trump has believed, since the 1980s, that the US should retreat behind a Great Wall of tariffs. Market crashes and recession forecasts could still cause him to retreat somewhat; but, at 78 and in his second term as president, he might well stay the course on the policy he has advocated for most of his adult life. If so, his only legacy will be a gray, resentful and defeated nation.

 

The average American citizen is as unprepared for being cut off from world markets as US  institutions are for the assault of a populist strongman. Those of us from parts of the world that have lived through both should perhaps let them know what it’s like. Presidential adviser Stephen Miller has promised that high tariffs will lead to a “great reversal” of America’s fortunes — and that is precisely what it will feel like. The world’s most vibrant and fortunate country will begin to feel colorless and left behind. The US, the focus of the world’s envy and admiration, will begin to resent how others live. 

 

I grew up in an India with extensive import restrictions and tariffs. Consumer goods, in particular, attracted duties upwards of 50%. It turned us into a nation of onlookers. We assumed we would get good things after everyone else; we heard and read about technological innovations that only the very rich among us got to use.

 

It was not until a trip to the UK, aged 11, that I held my first Walkman. American gamers appear likely to get a taste of similar exclusion soon; Nintendo Co. has frozen orders for Switch 2 from US-based customers. Sometime in the future, they may have to deal with the soul-crushing sight of their European or Japanese counterparts unboxing new consoles that are hard to come by at home.

 

Even if manufacturing takes off behind tariff walls, the absence of global competition lets it overcharge while skimping on features. Future mobile phones manufactured in the US might have cheaper substitutes for high-end camera sensors (made in Japan) or the latest touchscreens (from Korea). “Made in the USA” will turn from a badge of pride into an admission of sub-par quality. That’s what we in India once felt about “Made in India.” We’ve thankfully moved on since the economy was opened up.

 

Americans cut off from the latest and the best will start asking friends and colleagues travelling overseas to bring back something they desire. Every visitor from abroad when I was young was expected to arrive with gifts of watches, chocolates, or even non-stick cookware. These might be available at home, but the price difference meant it made more sense to spend months looking for someone to carry them over the border.

 

Canadian border towns will set up vast shopping plazas targeting US consumers. Just as the FDA used to crack down on Americans buying prescription drugs from Canada, a new federal bureaucracy will have to be created within US Customs and Border Protection to check if travelers are bringing back tariff-jumping cargoes of iPhones. 

 

And for good reason: You might be able to make back the cost of your plane ticket abroad by reselling a few duty-free phones on eBay. And where individuals might earn a quick buck, criminal syndicates will inevitably emerge, as well. Just another thing for Homeland Security to worry about, as if they haven’t been given enough already. 

 

It used to be the case that the upmarket department stores of Asia or Europe would be inundated with Chinese tourists rolling around suitcases that they would fill with luxury-good purchases; one day soon, those tourists might be American. In some countries, such as Sri Lanka, the hunger for duty-free goods is still so great that Colombo’s airport shops sell refrigerators and washing machines to returning passengers.

 

This is not a joyous way to live. It breeds anger and resentment. But some in the administration might think that US consumers must willingly pay this price so future generations might prosper.

 

The US came to dominate the world precisely because it promised the opposite. When Richard Nixon stood in a model suburban kitchen and debated Nikita Khrushchev in 1959, it was the Soviet leader who spoke of future generations. Nixon’s strongest argument was that ordinary American households could already afford the latest and the best technology.

 

The US that confronted the Soviet Union knew that a consumer’s passion was not to be scorned — it was the strongest force in politics, and that a longing for Levi’s jeans and rock records could bring down a superpower. That’s how it won the last Cold War. If America forgets these truths it has long held self-evident, it will lose the next.     (Disclaimer: This is a Bloomberg Opinion piece, and these are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper)