John Phipps' Tariffs 103: Tariffs and Politics

September 17, 2018 10:42 AM

This last installment of our tariff Agsplainer deals with the non-economic consequences. By choosing which industries should be protected from competition with tariffs, governments essentially choose which citizens are more important than others. Steelworker jobs are not more essential than other jobs to our economy and identity. Look at the tiny number of jobs supposedly protected by tariffs compared to the large number of jobs in steel using industries that are at risk from tariffs.

The steel tariffs, while done under national security legislation will do little to improve our safety. Trade interventions such as tariffs, quotas and embargoes are also imposed to achieve non-economic goals, such as the grain embargo against the Soviet Union to protest the invasion of Afghanistan.

Tariffs are like farm subsidies, costing millions of Americans a few dollars, but benefiting a few thousand citizens greatly. Such redistribution programs are always controversial. Meanwhile, thousands of other jobs are created and eliminated every year as our economy changes. It is far more efficient to let market forces pick winners and losers as opposed to government officials. It is also less hazardous for political careers.

These divisions are not confined to domestic favoritism. Consider the potential damage to our relationship with Canada and Mexico. Even if ruthless and ineffective tactics like unilateral tariffs wring some concessions from these steadfast neighbors, we’re probably going to be living next to them for a long time. Any farmer who has inherited a fence line squabble from their parents or grandparents knows how hard it is to rebuild a good working relationship.

Tariffs are tempting choices because we want immediate action and truly fruitful trade negotiations take long and excruciating effort. Tariffing authority has largely been ceded to the executive branch by Congress, as part of enabling speedier trade talks. But with this hammer, presidents too often see every trade problem as a nail.

Scott Lincicome, an international trade attorney with The Cato Institute, from whose copious research and writing I have shamelessly and frequently borrowed, sums up tariffs succinctly and elegantly:

“Tariffs not only impose immense economic costs but also fail to achieve their primary policy aims and foster political dysfunction along the way”

And yes, you can get that on a Tee Shirt.


Read John Phipps' full Tariff Agsplainer series.

John Phipps' Tariff 101: An Explanation of How Tariffs Work

John Phipps' Tariff 102: Do Tariffs Accomplish Policy Goals?

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Spell Check

Arthur Langved
New Town, ND
9/18/2018 09:53 PM

  Maybe we need to sell some US steel or other American product to get dollars to pay corn subsidy to John Phipps, or is he OK with Chinese Yen? Also, is it OK for a tariff on corn alcohol from South America, a continental neighbor, to make me pay more (like a tax) for US product? It also causes me to pay more for livestock food. Of course we can buy all our meat from Canada and Mexico, our dear neighbors, so they have dollars to buy the cheaper Chinese goods.

Arthur Langved
New Town, ND
9/18/2018 10:44 PM

  Of course we can continue to buy cheaper Chinese goods and not sell our own. We would run out of money to buy if it wasn't for the wonderful fact that OUR government can just keep printing more and more of it. Ours is the only one that can print real US Dollars. Trading paper money for Chinese steel, can you beat that? ????

9/18/2018 09:12 AM

  We are living in one world Ag brethren. Let's not forget that. Civilizations of the world depend on us.


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