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What are tariffs, and how do they work? - Video học tiếng Anh
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What are tariffs, and how do they work?
What are tariffs, and how do they work?
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คำบรรยาย (85)
0:06
In 1930, as the Great Depression ravaged the United States,
0:11
President Herbert Hoover made a bold economic decision.
0:15
With the goal of supporting American farmers and manufacturers,
0:18
he approved a sweeping 20% tax
0:22
on all imported agricultural and industrial goods.
0:26
He believed making foreign goods more expensive
0:29
would encourage consumers to buy domestic,
0:31
thus funneling cash into American businesses and creating more jobs.
0:36
But Hoover's plan completely backfired.
0:39
Other countries retaliated by taxing American goods,
0:43
leading exports to fall and global trade to decline.
0:47
In the end, this policy led American prices to spike
0:51
and caused even more unemployment.
0:54
These disastrous outcomes of the Smoot-Hawley Tariff Act
0:57
were no surprise to the over 1,000 economists
1:01
who publicly condemned the bill.
1:03
But this wouldn’t be the last time a world leader was shocked
1:06
by a tariff's consequences.
1:09
So, what exactly is a tariff?
1:12
A tariff is a tax an importer pays to bring foreign goods into a country.
1:17
For example, if they import $1,000 worth of goods at a 10% tariff rate,
1:23
they'll pay $100 to the government in addition to $1,000 to the seller.
1:29
Foreign exporters could respond to a tariff by reducing their product’s price
1:34
to keep an importer’s business.
1:35
But if they don’t, importers bear this cost
1:38
and then increase their prices so consumers will make up the difference.
1:43
This may sound straightforward,
1:44
but enacting a tariff kicks off a complicated economic chain reaction.
1:49
So to keep things simple,
1:51
let's look at some examples from just one country
1:54
to explore some of the factors that make a tariff’s outcomes tricky to predict.
1:59
First, tariffs can be applied to different countries at different rates.
2:04
For example, in 2024,
2:07
America had a 6% tariff on all wool entering the country.
2:11
However, if that wool came from Mexico or South Korea,
2:15
it would be tariff-free due to trade agreements.
2:18
Meanwhile, importers getting wool from Russia could face a hefty 55.5% tariff.
2:25
Policies like these might help domestic wool producers,
2:29
or they might just encourage importers to buy from specific foreign producers.
2:34
Things get even trickier when trying to predict how tariffs impact jobs.
2:39
Sometimes the jobs they create come at a high cost.
2:43
In 2018, the US imposed a tariff on washing machines
2:47
that created 1,800 jobs
2:50
and raised roughly $82 million in government revenue.
2:55
However, it also increased the average price of washing machines by $86,
3:01
costing consumers roughly $1.5 billion.
3:05
This means consumers paid roughly $817,000 to create each of those jobs.
3:13
In other cases, the jobs tariffs create come at the cost of existing jobs.
3:18
In 2002, the Bush administration imposed tariffs as high as 30%
3:23
on imported steel.
3:25
Employment in US steel production had been decaying for decades,
3:29
so by making foreign steel more expensive,
3:31
the tariff sought to create new jobs for US steel manufacturers.
3:36
Initially, the policy did slow down job loss.
3:39
But since US steel still cost more than pre-tariff foreign steel,
3:44
domestic industries that used this material had to increase their prices.
3:48
This made their products less competitive internationally,
3:51
where foreign manufacturers were still using cheap steel.
3:55
Within a year of enacting the tariff,
3:57
the US lost far more jobs in steel-related industries
4:01
than they gained in steel-producing industries.
4:05
Clearly, how other countries respond to tariffs
4:07
is another big part of the ripple effect these policies have.
4:11
One clear example comes from 2018,
4:14
when the US attempted to address its trade deficit with China
4:17
by taxing Chinese goods.
4:19
While these tariffs protected domestic businesses
4:21
and raised government revenue,
4:23
they also set off a trade war.
4:25
China retaliated by raising tariffs on US exporters,
4:29
including farmers relying on Chinese markets for soybean sales.
4:33
In the end, this led to higher prices for US consumers
4:37
and a slight drop in America's GDP.
4:41
Trade wars aren’t new.
4:42
And even in the 18th and early 19th centuries,
4:46
when certain tariffs did help struggling industries find their domestic footing,
4:50
they were mostly used to raise government funds.
4:53
But over the last 200 years,
4:55
our global economy has become far more interdependent.
4:59
Today, there are more manufacturing components
5:01
being imported than ever before,
5:04
many of which are used to make a wide variety of consumer goods.
5:08
This complexity means that even a seemingly simple tariff
5:12
can trigger a global chain reaction,
5:15
creating more consequences than anyone can plan for.
