Tariffs Bad, Made in America Good
Clint Kennedy
BasicEconomicsToday.com
Tariffs are taxes on imports from foreign countries. Tariffs are paid by the companies importing their products to foreign countries. The tariffs are paid to foreign governments. What makes tariffs bad is that costs are raised for the companies providing the products. These companies will then raise their prices to cover their increased costs. They will also try to export to other countries. In the domestic country where the tariff was imposed companies can now raise their prices, because foreign competition is offering at higher prices. That means that buyers of the product in the domestic market now have to pay higher prices!!
Here is an example. The Trump Administration has imposed a 25% steel tariff, per the US Department of Commerce (2018). Steel imports from foreign countries, except for Canada and Mexico, now have an increased cost. Domestic companies producing steel are "protected" by the tariff and will raise their prices also. Lower priced steel is no longer available. Steel is an intermediate good, meaning it will be used to produce other goods. US companies buying steel to make products will pay higher prices. US companies using steel will then raise their prices too to cover their increased costs. Now US consumers buying all products made with steel will pay higher prices!! The result of tariffs is that US companies and consumers pay higher prices!!
Another example involves the US tariff on solar panels (solar cells) at 30 percent for the first year, per the Office of the US Trade Representative (2018). Chinese mass production and supply of cheaper solar panels has now been partially blocked to the US. US Solar companies are seeking more US domestically produced solar panels. The problem again is solar panels will now cost more for US companies and consumers. Fossil fuels are now protected. If you believe the scientists that global warming is happening and fossil fuels make the situation a lot worse, then you know that protecting fossil fuels is morally wrong.
How can the over supply of steel and solar panels from China be addressed? Lower priced products from China should be allowed in without interference. When China provides an underpriced glut of supply American companies and consumers get lower prices. America can protect its industries without using tariffs. America can increase its production and manufacturing domestically using artificial intelligence (AI), robotics and better trained employees. It's time for "Made in America" to return. We can make it cheaper, better, and more of it!!
Laissez-Faire policies, i.e. policies that let the market run freely, need to be applied to international trade. Then we can grow with other countries instead of rejecting them!!
Clint Kennedy
Basic Economics Today LLC
Copyright © 2018
Here is an example. The Trump Administration has imposed a 25% steel tariff, per the US Department of Commerce (2018). Steel imports from foreign countries, except for Canada and Mexico, now have an increased cost. Domestic companies producing steel are "protected" by the tariff and will raise their prices also. Lower priced steel is no longer available. Steel is an intermediate good, meaning it will be used to produce other goods. US companies buying steel to make products will pay higher prices. US companies using steel will then raise their prices too to cover their increased costs. Now US consumers buying all products made with steel will pay higher prices!! The result of tariffs is that US companies and consumers pay higher prices!!
Another example involves the US tariff on solar panels (solar cells) at 30 percent for the first year, per the Office of the US Trade Representative (2018). Chinese mass production and supply of cheaper solar panels has now been partially blocked to the US. US Solar companies are seeking more US domestically produced solar panels. The problem again is solar panels will now cost more for US companies and consumers. Fossil fuels are now protected. If you believe the scientists that global warming is happening and fossil fuels make the situation a lot worse, then you know that protecting fossil fuels is morally wrong.
How can the over supply of steel and solar panels from China be addressed? Lower priced products from China should be allowed in without interference. When China provides an underpriced glut of supply American companies and consumers get lower prices. America can protect its industries without using tariffs. America can increase its production and manufacturing domestically using artificial intelligence (AI), robotics and better trained employees. It's time for "Made in America" to return. We can make it cheaper, better, and more of it!!
Laissez-Faire policies, i.e. policies that let the market run freely, need to be applied to international trade. Then we can grow with other countries instead of rejecting them!!
Clint Kennedy
Basic Economics Today LLC
Copyright © 2018