Tag Archives: Tariffs

Why should steel users have to pay more to buy internationally?

Economist Mark Perry at the blog Carpe Diem makes an interesting point about steel tariffs.

For steel companies and their political accomplices to argue for higher steel tariffs is really an argument for allowing domestic steel producers to hijack the political process so that they can engage in the legalized theft and plunder of the American people. From the viewpoint of the consumer, tariffs are simply legalized theft on behalf of domestic producers, sanctioned and endorsed by their political enablers.

Cronyism of the Worst Kind

Getting the government to place tariffs on a competitor’s product would certainly be in the Cronyism 101 textbook. In this Bloomberg example, a German company was charged with tariff evasion for importing their honey from China to the USA. US beekeepers accused Chinese companies of dumping their products on the American market, making it impossible for them to compete. The German company went to extraordinary lengths to get around these tariffs, which is just one example of distortions cronyism can cause. This may be a sweet deal for American beekeepers, but it’s the consumer getting stung:

Sometime around 10 a.m., von Buddenbrock heard a commotion in the reception area and went to have a look. A half-dozen armed federal agents, all wearing bulletproof vests, had stormed in. “They made a good show, coming in with full force,” he recalls. “It was pretty scary.”

Government Protects Consumers From Low Prices

The Coalition of Shrimp Industries, representing shrimp fishermen and processors in several southern US states, filed a petition last year asking the federal government for import relief.

That’s from The Borneo Post. The petition led the Commerce Department to increase tariffs on shrimp imports from five counties – India, Ecuador, Vietnam, Malaysia, and China. Ostensiably, the tariffs were increased to offset foreign subsidies and protect domestic producers from inexpensive foreign competition, but a direct effect will be relatively higher prices for U.S. consumers.

A Shoe Tariff With a Big Footprint

Blake W. Krueger writes at the WSJ about tariffs on shoes, a policy from the depression era that hasn’t been eliminated.

For the past eight decades, the Smoot-Hawley Tariff Act of 1930 has raised the price of footwear from overseas by as much as 67.5%.

When the average American family buys 144 pairs of shoes for each child over the course of childhood, and when the average American buys eight pairs of shoes annually, price considerations are hardly a minor matter. The economy is inching its way back from a severe recession and the purchase of essential items is still difficult for many U.S. households. So as cost-conscious Americans clip every coupon, they might well wonder about government policies that no longer make sense and take needed money from consumers.

Whirlpool Hurt by Korean, Mexican Washer Imports; Consumers Helped?

Eric Martin writes an article at Bloomberg that about American manufacturer Whirlpool “being harmed” by imports from foreign countries. Their solution is to complain to government in order to get tariffs or other protectionist legislation:

Whirlpool Corp. (WHR) is being harmed by imports of large, residential washing machines made in South Korea and Mexico, a U.S. panel ruled in the first step toward imposing tariffs on the products.
The U.S. International Trade Commission voted 4-1 today in Washington on Whirlpool’s petition for anti-dumping duties on LG Electronics Inc. (066570) and Samsung Electronics Co. (005930) shipments, saying sales of the products below fair value are harming the Benton Harbor, Michigan-based company.

Restricting imports in order to benefit domestic industry is bad for consumers: it restricts choices and increases prices.

Federal Agency Has its Own ‘Tequila Working Group’

Daniel Wagner at the AP writes an article about a little-known government agency – the Alcohol and Tobacco Tax and Trade Bureau – and mentions some of the cronyism it engages in:

Since 2010, under similar deals with alcohol and tobacco companies, the agency has forgiven more than $25.4 million; the total amount is unclear because some public documents do not list the size of the tax bill or penalty that is being reduced…

Sometimes, to protect U.S. producers, the bureau erects trade barriers of its own. Under a proposal by the bureau last spring, anything labeled Pisco must have originated in Chile and Peru.

Are Sugar Tariffs Good Policy or Cronyism?

Rep. Tom Rooney of Florida wrote an op-ed in the Daily Caller defending sugar tariffs, and claiming they are a necessary policy.

Economist Art Carden isn’t buying this argument. He wrote a rebuttal to Rep. Rooney’s piece, also published in the Daily Caller:

Congressman Rooney would do well to heed the wisdom of 19th-century economist Frederic Bastiat. In the words of one of my students, “Restricting trade is using force with the intent to increase production, but it is costly. In What is Seen and What is Not Seen, the economist Frederic Bastiat writes, ‘To use force is not to produce, but to destroy.’ Destruction takes away opportunities for innovation and growth, and it leads to a static society.”

Tariffs benefit special interests, but the losses to consumers are larger than the gains to domestic producers and the government. As a country, we would be better off without sugar tariffs.

Academic Veronique De Rugy also disagrees with Rep. Rooney, and wrote that these policies are nothing more than cronyism:

Unfortunately, lawmakers from Florida such as Marco Rubio and Tom Rooney continue to ignore the incredible cost this presents to Americans, and vote in favor of these protections. I have made the case before that we need to end this cronyism, and obviously we need to continue making it.

Economist Don Boudreaux went farther, authoring a letter to Rep. Rooney countering his claims and furthering the point that these policies are really just special interest favors:

The world price of sugar today…is about half of the price of sugar in the U.S. This fact reveals that the sugar producers with genuine OPEC-like monopoly power are not the ones that Uncle Sam must forcibly prevent us from patronizing (foreign growers), but, rather, American growers whose gluttonous special privileges are created by the very program that you seek to justify with your Orwellian sophistry.

Humor: U.S. Commerce Department plans to raise taxes on Americans buying solar panels from China

Mark J. Perry writes at the AEI-Ideas blog about a recent article explaining how the U.S. Commerce Department is increasing tariffs on Chinese solar panels – or, more appropriately, on the American consumers of those panels. Perry re-writes the piece to show what the real impact this decision will have:

The Commerce Department issued its final ruling Wednesday in a long-simmering trade dispute with China, imposing tariffs taxes on American consumers and solar-installation companies ranging from about 24 to nearly 36 percent on most solar panels imported from the country China, in order to protect domestic producers from foreign competition.

The penalties on American consumers are somewhat lower than those announced by the department earlier this year, when the government determined that Chinese companies American consumers were benefiting from unfair government subsidies from Chinese citizens and were selling their benefiting from purchasing Chinese products in the United States below the cost of production, a practice known as dumping . “giving American consumers a great deal.”

The Sugar Industry’s Bitter Reality

Mau Now points out the dual nature of sugar tariffs – the tariffs benefit sugar producers but negatively impact employment in the confection industry.

US Senator Daniel Inouye, whose grandparents emigrated from Japan to work in the Hawaiian sugar industry, came out strongly opposed to reforming US sugar policy, remarking to his fellow lawmakers “Hawaii’s existing sugar producer could potentially close, forcing my constituents to lose their livelihood,” and going on to predict that “If the US sugar policy were eliminated… the US market would collapse.”

But wait, there’s more:

The US International Trade Administration in 2011 framed the problem in similarly stark terms: for every job in sugar harvesting saved, three jobs in the confection industry are sacrificed