The imposition of duty Among countries it generates adverse effects both in Peru and on a global scale, since it distorts the allocation of resources in the economy.
The associate professor of the Department of Economy of the University of the Pacific, Marco Ortiz, explained that tariffs, regardless of their origin, represent a tax that ends up being assumed by consumers and producers, reducing social welfare.
On the impact of the commercial war between the United States and China in Peru, Ortiz said that this would be negative, since it would affect Peruvian companies whose exports are part of the value chain of both economies.
“If Chinese goods are destined for the United States and in their production Peruvian inputs are incorporated, such as copper, fishmeal or agricultural products, the application of tariffs will affect the value chain and, consequently, Peruvian exports,” he explained.
In general terms, Ortiz warned that the commercial war will make it difficult to integrate countries into international trade. “Everyone will have greater problems to link to the foreign sector,” he added.
He also said that the application of tariffs will impact all economies, either directly or indirectly, by reducing export and import capacity. This will happen because the products will be more expensive for buyers or will have less demand, which will limit international trade.
Trade diversion
Ortiz indicated that, in some segments, there could be a trade detour. However, the final effect would be harmful to the majority.
“For example, if the United States imposes tariffs on products in which Peru and China compete, such as textiles, Peruvian products could become more attractive to export to the US,” he explained.
However, he stressed that tariffs generate multiple distortions in relative prices. While some products can benefit temporarily, most will be affected, and consumers will assume the final cost through price increase.
“We’ll see what governments do with that money. They could argue that they will use it to reduce the debt or lower other taxes, but there will always be a justification for its implementation, ”he said.
In this context, Ortiz concluded that tariffs lead to a worse resource assignment. “In a world without these distorting taxes, companies would produce in the most efficient places, optimizing costs and resources,” he said.
Negative effects to force produce in the United States
During the World Economic Forum in Davos, the former president of the USA, Donald Trump, warned companies: “If they do not manufacture their product in the United States, which is their prerogative, then they will simply have to pay a tariff, of amounts variables ”.
Ortiz said companies choose to produce outside the US for economic reasons. “In a market without state intervention, companies establish their plants where it is more efficient and profitable to produce,” he explained.
The most efficient locations are those where resources and costs are optimized. When a government introduces taxes to alter these factors, it increases production and reduces competitiveness.
“Why don’t factories in Ohio install? Because labor in the US is very expensive. Paying an American to perform manual tasks significantly increases production costs. On the other hand, in other countries, there are workers with those same skills willing to work for less, ”he said.
Therefore, from a global perspective, it is more efficient than production is carried out in places where costs are lower.
“If you insist on manufacturing in a country with high labor costs, the final product will be more expensive and inefficient. And if you use taxes to force that local production, you will only make goods more expensive for consumers, ”he concluded.
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