ELIZABETHTON, Tenn. (WJHL) — News Channel 11 met with an economics professor at Milligan University on Wednesday to discuss tariffs.

Milligan University professor David Campbell discussed the Smoot-Hawley Tariff Act of 1930, how local manufacturers could be affected, and whether keeping natural goods domestic is plausible.

When asked how President Trump’s tariffs compared to other imposed American tariffs, Campbell remembered the Great Depression.

“Well, most economists regard Smoot-Hawley as being a contributor to the Great Depression,” he said. “It wasn’t the cause, but we think it made it worse, and that’s a pretty mainstream view, that tends to be people’s reactions when the economy gets going sideways, maybe tension rising among nations, and you might be looking [for] a place to blame.

“And so tariffs have been used in this way before, but it generally works out poorly.”

Regarding who bears the cost of imposed tariffs, Campbell noted that this is often misunderstood.

“Who actually pays the tariffs is the importing company,” he explained. “So it is actually a company inside the country that pays the tariff. It’s not foreign governments or corporations.”

The cost passed to consumers depends on the nature and demand of the good. Consumers will always purchase certain items like gasoline, milk, and eggs, which economists refer to as “inelastic goods.”

Inelastic goods have few substitutes, leaving the cost “wholly passed on to consumers,” Campbell said.

Elastic goods, such as concert tickets, designer bags, or video games, are easier for consumers to replace. Tariffs on elastic goods leave businesses to act more astutely.

“The more elastic goods, the companies have to be a little bit more careful with it because if they do try and pass on the higher cost, consumers again, in the nature of demand, they’ve got more substitutes available, and they may put off that consumption decision altogether,” Campbell said.

News Channel 11 asked Campbell how he thought local manufacturers, such as Eastman, Domtar, and Food City, would be affected.

He said companies would face higher costs; it would just be a decision to determine the source.

“A lot of manufacturing will probably be affected by this,” Campbell said. “We import steel from Canada. So, from a manufacturing perspective or even just a retail perspective in your grocery store, they are going to face higher costs. To some extent, they’re going to pass those costs onto the consumer. But on the flip side, they’re going to try and cut costs in other places.

“So, if you’re thinking manufacturing, that may take the form of them cutting back labor hours if the other costs of their materials are higher. So, that’s a possible outcome. They may alter the products that they’re producing. So this may make some product lines less profitable than others, and they may pivot away from certain things.”

News Channel 11 also asked Campbell about the feasibility of sourcing all goods domestically and if it would create more American job opportunities. He said to keep two thoughts in mind.

“Number one is that there’s a reason companies were choosing to import those materials and goods from another country, and that’s because it is cheaper. So even if we do start producing those things here, it’s going to be a higher cost. We’re going to get higher costs one way or another with the tariff, either paying the tariff to import the goods, or they’re going to be more expensive to produce here.”

Campbell said the second idea to remember is that the ultimate goal of the tariffs is to reduce imports.

To better understand these two concepts, Campbell explained when President Trump placed tech tariffs on imported washing machines during his first term.

“So what we saw was that a few of the foreign companies, manufacturers like Samsung, did open some additional factories in the United States. There were some jobs associated with that.

“But we also saw that the price of all washing machines went up, not just the imported ones but also the domestically manufactured ones. So the price of washing machines went up, and the price of dryers went up because when you buy a washing machine, you usually buy a dryer,” he said.

Campbell said the economic playing field among the United States, Canada, and Mexico is equitable and mutually beneficial, allowing economists to assess each country fairly.

“In this instance, with these trade agreements and the putting tariffs on our neighbors where we have a free trade agreement in place, you know, I hate to say it, but the United States is the one who’s doing some, you know, outside of orthodox trade policies,” he said.

When asked what would prompt President Trump to withdraw the imposed tariffs, Campbell believes he will be triggered by a recently reported weak stock market performance.

“But ultimately, at the end of the day, at least from perspective, he’s the one driving this. He’s really the only one who’s going to decide when to pull back on it,” he said.