“”Contrary to conventional wisdom, imports are not a drag on the U.S. economy or the price we pay to sell goods and services abroad. In fact, rising imports coincide with stronger economic growth,” Scott Lincicome and Alfredo Carrillo Obregon write in The (Updated) Case for Free Trade, a Cato Institute study published in May. “The payoff to the United States from expanded trade between 1950 and 2016 was $2.1 trillion, increasing GDP per capita by around $7,000 and GDP per household by around $18,000.”
“Higher imports are also correlated with higher private‐sector employment in the United States, as numerous industries and workers depend on trade,” they add.”
“Could high tariffs and “buy American” policies compel firms to find domestic suppliers? Well, maybe. But foreign sources were chosen for a reason; replacing them with domestic suppliers will require compromises. “Subsidising electric cars assembled in North America will make them more expensive and lower-quality,” The Economist cautioned of protectionist policies. And since politicized policy tends to breed yet more politicization, tariffs and subsidies will inevitably be further burdened with conditions. “The red tape will raise costs to consumers and taxpayers still further.””
“Consider that supposedly worker-centric trade policy. Biden has left in place many of the tariffs imposed by President Donald Trump, including the levies on aluminum and steel. By artificially hiking the price of imported steel, those tariffs are supposed to boost domestic production, creating more and better-paying steelworker jobs. But the cost of the tariffs rebounds onto every industry that uses steel to make other products. While about 57,000 Americans work in steelmaking jobs, more than 12 million are employed in manufacturing jobs that use steel. The tariffs hurt those workers.
Even steelworkers suffer from the tariffs, which raise prices for cars, appliances, and a host of other products. The Peterson Institute for International Economics, a trade policy think tank, estimates that repealing those tariffs would put about $800 back in the average family’s pockets this year.
Biden also has decided to extend tariffs on solar panels and their component parts, which were due to expire this year. In theory, those tariffs promote domestic manufacturing. In reality, they have cost more than 62,000 jobs in the four-plus years since Trump first implemented them by sharply cutting the number of solar panels available for installation and service, according to the Solar Energy Industries Association.”
“Trade and labor policies should not be worker-centric or consumer-centric. They should be market-centric, because trade and labor are both parts of a market system that benefits Americans as workers and consumers.”
“Sen. Marco Rubio (R–Fla.) led a bipartisan group of lawmakers—all of them from Florida—in submitting a petition to U.S. Trade Representative Katherine Tai seeking “an investigation” into what the lawmakers call “the flood of imported seasonal and perishable agricultural products from Mexico.” They ask Tai to invoke Section 301 of the Trade Act of 1974 to impose “trade remedies” that will protect American growers from the scourge of…low-priced produce.
While they don’t come out and say it directly, it’s obvious from the letter that Rubio and his colleagues are seeking tariffs on Mexican produce. Section 301 is the same mechanism the Trump administration used to impose wide-ranging tariffs on goods imported from China. It’s a law that grants the executive branch broad, unilateral power over trade.
Rubio and the other lawmakers say the Mexican government is subsidizing its domestic agricultural infrastructure as part of a scheme to undercut the prices charged by U.S. growers. “Mexico poses a direct threat to Florida’s seasonal and perishable agricultural industry,” they conclude.”
“Anyone who has taken a basic economics class should be able to explain what’s happening there. A high level of supply tends to push prices downward. Whether grown in Mexico or Florida, it makes sense that cucumber prices would be at their lowest when there are a lot of cucumbers in the market.
But that’s not how Rubio and his colleagues see it. Instead, the petition describes this minor pricing difference as “a clear attempt to displace Florida cucumbers from the U.S. market.”
Take a moment to enjoy the fact that some of the most powerful men and women in the U.S. government are freaking out over the idea that American consumers might get to save a few cents on their next cucumber purchase. Then amuse yourself with the optics of American agricultural special interests—which are, of course, pulling Rubio’s strings here—complaining about subsidies, as if “direct government aid” doesn’t account for nearly 40 percent of American farmers’ annual income.
“These Florida politicians are following a time-honored tradition of trying to help their local constituents at the expense of Americans in other states, who benefit from low-priced fruits and vegetables regardless of where they are grown,” says Bryan Riley, director of the free trade initiative at the National Taxpayers Union Foundation. “
“tariffs of all kinds are regressive taxes that hike costs for consumers and make it particularly difficult for poorer households to afford basic goods.
Eliminating many tariffs that serve little purpose “would ease financial burdens in a small but real way for American low-income and minority workers and their families, helping to raise their living standards without intensifying competitive pressure””
“Trump’s tariffs have contributed to inflation and helped to artificially inflate the cost of everything from appliances to housing. About two-thirds of all imports from China are now subject to tariffs when they enter the United States, with the average tariff being 19.3 percent. That’s six times higher than the average tariff on Chinese-made imports before Trump’s haphazard trade war began. That’s certainly not helping poorer Americans improve their standard of living.
But, as Gresser points out, other aspects of the U.S. tariff code are also to blame for imposing regressive taxes on poorer Americans. Under the “Most Favored Nation” (MFN) system of tariffs that are applied to imports from countries with which the U.S. does not have a specific trade deal, many common consumer goods are subject to higher tariffs than their luxury alternatives. Stainless steel spoons are tariffed at a much higher rate than far more expensive sterling silver spoons, for example, and cheap sneakers are charged a tariff more than five times higher than leather dress shoes.”
“For months, we’ve been treated to headlines promising that the Biden administration is considering lifting Trump’s tariffs. In June, administration officials told The New York Times that lifting tariffs might reduce inflation by a quarter of a percentage point—even though independent studies suggested the effect could be greater. Yet nothing was done, even after Biden promised that corralling inflation was his “top domestic priority.””
“Tariffs aren’t merely making summer fun more expensive—they are also making it potentially more dangerous too.
“Life Saver is not a misnomer,” writes Neil Mooney, an attorney representing Life Saver Pool Fence Systems, Inc., in testimony submitted earlier this month to the U.S. International Trade Commission (USITC), which later this week will hold a hearing on the economic impact of the multitude of tariffs imposed by the Trump administration in 2018.
For a company like Life Saver, which manufactures fencing meant to keep children away from unsupervised pools where they might accidentally drown, the tariffs have hiked the cost of raw materials imported from China. In his written testimony, Mooney estimates that the company has paid about $1.2 million in tariffs over the past four years—and has twice had to raise prices “specifically because of the tariffs.”
“The imposition of the Section 301 tariffs has forced Life Saver to raise its prices which inevitably has led to lower sales volume and therefore fewer protected pools,” writes Mooney. “The economic impact of the Section 301 tariffs is not only felt by Life Saver and other similar businesses and their employees, but also by the end consumers—American families.”
Are higher taxes on Chinese-made imports worth leaving American children marginally less safe?
Apparently so, at least for the past two presidential administrations. Former President Donald Trump used Section 301 of the Trade Expansion Act of 1974 to impose tariffs on a wide range of goods imported from China in several phases during 2018 and 2019. As a result, the average tariff rate applied to goods from China effectively doubled. Cumulatively, Americans have paid about $136 billion in higher costs as a result of those import taxes—that’s about $1,000 per household, according to research by the National Taxpayers Union, a nonprofit that opposes the tariffs.
Tariffs are adding to inflation, too. A study by the Peterson Institute for International Economics, a trade-focused think tank, found that repealing tariffs could reduce overall inflation by about 1 percentage point. Despite that, the Biden administration has so far been unwilling to do more than talk about repealing the tariffs imposed by Trump.”
“Tariffs on seafood have hit Alaska in particular, Alaska’s fishing industry generates over $5 billion dollars in economic activity and creates nearly 70,000 jobs in the state, making it a vital lifeline for the state. Over 40 percent of U.S.-caught Alaskan salmon and one-third of all seafood from Alaska is exported to China each year. Much of it is processed in China and then re-imported to the United States for sale in grocery stores.
As the National Fisheries Institute points out, this split processing stream has contributed to rising seafood costs for U.S. consumers, as China’s retaliatory tariffs hit seafood when imported for processing and the original U.S. tariffs hit products upon their return to American shores.”
“For consumers, meanwhile, these costs are discouraging consumption of fish, according to a February study published by data analytics firms IRI and 210 Analytics. That month alone, sales of frozen seafood products decreased by 9.4 percent, while fresh seafood sales decreased by 12 percent.”
“When the Trump administration implemented tariffs on Chinese chemical companies in 2018, administration officials said tariffs would make American chemical companies more competitive. But industry groups told regulators last week that it’s had the opposite effect.
At a Thursday hearing on the impact of the Trump administration’s tariffs against China, the American Chemistry Council (ACC), an industry group representing over 190 U.S. chemical companies, informed the International Trade Commission that imports of Chinese chemical products have instead grown continuously since the tariffs took effect in June 2018. Over $35 billion worth of chemicals were imported from China in 2021, and Chinese companies now make up a larger share of U.S. chemical imports than they did when former President Donald Trump took office in 2017.
Per the ACC, the Trump administration failed to account for American manufacturers’ reliance on intermediate products exclusively produced in China. “China is the primary source of many valuable inputs to U.S. chemical manufacturing processes, and for which few or no alternatives exist,” an ACC representative said. “It would take years, and billions of dollars, to build manufacturing capabilities for these inputs in the United States or other countries.”
Dyes stand out as some of the most notable examples of vital Chinese imports impacted by chemical tariffs. For U.S. manufacturers to produce Red 57, a red pigment commonly found in many cosmetic products, they must import 3-hydroxy-2-naphthoic acid, also known as BONA, from China. BONA is exclusively produced in China, forcing American manufacturers to bear the higher costs associated with importing these critical Chinese-made inputs for their final products.”
“Despite the attention given to the industry by the federal government in recent years, chemical companies are warning that tariffs are hurting their ability to invest new capital in their supply chains and innovate on issues like climate change. They also worry that it will slow job growth and hinder the Biden administration’s broader efforts toward restoring resilience in the supply chain while only contributing to higher costs for consumers.
“[T]ariffs are clearly not working for the chemicals and plastics sector,” the ACC said in their testimony. “[They] are making the United States a less attractive place for jobs, innovation, and plant expansion.””
“President Joe Biden won’t impose new tariffs on imports of solar power equipment for two years to help ease the fears that have slowed the growth in the renewable energy sector, and will invoke the Defense Production Act to spur domestic manufacturing of critical clean energy technologies, including solar panel parts.
The moves come as the solar energy industry has been roiled by a Commerce Department probe into whether companies in four Southeast Asian countries have circumvented the tariffs on Chinese shipments of solar equipment to the U.S. Those fears have slowed the development of large projects that are crucial to meeting the Biden administration’s goal of eliminating carbon emissions from the power sector by 2035.”
“A tiny solar panel manufacturing firm with outsized political clout is poised to wreak havoc on the entire American solar energy industry.
And the White House, which at least theoretically supports expanding America’s green energy industries, might just go along with the madness. It’s a tricky situation for President Joe Biden to navigate, one that requires choosing between two of his top policy priorities: industrial protectionism and combatting climate change.
In February, the California-based company Auxin Solar submitted a petition to the U.S. Department of Commerce asking for a more expansive set of tariffs targeting imported solar panels and their component parts. The company alleges that American solar panel manufacturers are avoiding tariffs on Chinese-made solar panels and components—tariffs originally imposed in 2018 by the Trump administration but renewed earlier this year by Biden—by buying parts made in Cambodia, Malaysia, Thailand, and Vietnam that are sometimes made with Chinese parts.
That is, of course, pretty much exactly what you’d expect any company to do. But Auxin argues that the federal government now has a responsibility to stop what it calls attempts to “circumvent” those tariffs on Chinese imports by imposing new tariffs on imports from those four other countries as well. In March, the Commerce Department launched an investigation to determine whether those tariffs are to be added.
According to the Solar Energy Industries Association (SEIA), those prospective tariffs would target the source of about 80 percent of America’s supply of crystalline silicon photovoltaic cells, the fundamental building blocks of solar panels. In a letter to Commerce Secretary Gina Raimondo in March, dozens of the SEIA’s member companies warned that the tariffs would “stall both ongoing and planned U.S. solar projects and lead to the loss of over 45,000 American jobs, including 15,000 domestic solar manufacturing jobs.” It would also mean losing about 14 gigawatts of planned solar deployment—about two-thirds of the Energy Information Administration’s target for solar deployment this year
All that, the SEIA warned, “because a single company is seeking to inappropriately exploit the law for market advantage.”
It sounds like a typical story of big business using its political clout to shut smaller competitors out of the market. But the bizarre thing about this fight is that relatively unsuccessful businesses are holding the rest of the market hostage. Because they have friends in Washington”
“this offers a lesson about how protectionism creates perverse incentives in markets and politics. Trump’s decision to impose tariffs on Chinese solar parts and Biden’s decision to extend those tariffs have created a bizarre situation where a bankrupt solar manufacturer and an “artisanal solar boutique” might get to dictate the future of an entire industry.”