Business and businesses have fled the U.S. because the Left has created such an unfriendly business environment. The cause of our economic problems is none other than THE FEDERAL GOVERNMENT which tariffs absolutely fail to address and in fact, make matters worse.
Below is an explanation as to why U.S. protective tariffs make matters worse using the auto industry as an example, which issues are basically true for most American industry in general and manufacturing in particular.
“Protective” tariffs do more harm than good, penalizing the American consumer and lowering our standard of living by appearing, but actually failing, to attack the REAL reasons for our economic and competitive malaise - a palliative, not a curative, measure making matters worse. In the case of autos, tariffs would increase costs to American consumers by forcing taxes (tariffs) on incoming foreign cars while doing nothing to address the underlying causes of Detroit’s demise.
Protective tariffs are like shooting yourself in the foot. If another country shoots itself in the foot with tariffs, why should we follow suit?
Why is there greater demand both here and abroad for foreign cars than American cars? Is it because the big bad foreign countries have subsidized their cars or put tariffs on American cars? No, it is because American cars are famously inferior in quality in general to foreign cars. Why are American cars inferior to foreign cars? Why is Detroit a ghost town now? Is it because of those nasty foreign counties’ subsides or tariffs? OF COURSE NOT!
The REAL reasons foreign autos out-compete American autos began in the 60’s and 70’s when the fat-cat manufacturers in Detroit ignored warnings that foreign auto makers were innovating their engineering and manufacturing techniques. Detroit got lazy and did not want to be bothered until, as the story goes, one day an executive on a trip to the west coast in the 70’s was stunned to see so many Japanese cars on the road.
So the first reason for inferior American auto products was LACK OF COMPETITION.
When Detroit finally saw they had real foreign competition, it ran into another big problem – unconstitutionally federally protected unions. “UAW contracts bound and gagged the Big Three with costs and obligations that fatally restricted their ability to innovate and compete” https://cei.org/2013/07/29/empire-of-rust-how-the-uaw-killed-detroit.
So UNCONSTITUTIONALLY FEDERALLY PROTECTED UNIONS were the next reason for inferior American products that could not compete.
So what was the reaction? Of course, more government. In business, if you fail, you correct or die. In government, if you fail, you just call for more money and more government and you end up with an even greater degree of failure.
So what has government done? Imposed suffocating HIGH TAXES, unconstitutional dead-end REGULATIONS, unconstitutional business-and-job-killing FEDERAL MINIMUM WAGE, and engaged in basically unconstitutional SUBSIDES (BRIBES) FOR SPECIAL INTERESTS. They also stupidly DESTABILIZE & DEVALUE THE DOLLAR. Result? A greater degree of failure.
THE FEDERAL GOVERNMENT, not the EU, China, or the Man in the Moon, is the MAIN reason for our failure to compete in the marketplace. Federally protected unions, high taxes, regulations, minimum wage, subsidies, and a weak dollar all have converged to “bind and gag” American business and drive industry from our shores. Kill these mostly unconstitutional and boneheaded acts and policies and you’ve gone a long way to fixing the problem. Trump has directly addressed some of these problems. ALL need to be abolished.
In the meantime, what do protective tariffs accomplish besides penalizing the American consumer and lowering our standard of living? It restricts open competition. And NO COMPETITION was the problem in the first place. More government creating more of the same old problems.
Economically-meddling government creates poverty. The market economy free from government interference creates wealth. Open competition in the free market drives innovation, lower cost, and higher quality in the free market. The American economy and consumer win with open competition in the free market. American industry (not special interests) wins when it is free from the feds.
As far as “trade imbalance” (or “trade deficit”) goes, imports exceeding exports is not per-se a bad thing but is one of the many oft-used scare labels that is not very well understood. Simply put, we all engage in a “trade deficit” on a regular basis when we go to the grocery store. They get our money, we get groceries. Do we go away thinking, “Oh no, I’m suffering from a ‘trade deficit’ with the grocery store.”? Of course not. We got what we wanted and ofttimes, if we’re lucky, certain imported goods that are the world’s best. A country’s superior natural resource is often the reason that country produces the best type good anywhere. “Trade deficits” do not state an economic problem per se. Failure to openly compete in the marketplace because of government interference is absolutely an economic problem.
Let’s get smart.
The tariffs I suggested would hardly cause a ripple in consumer prices, if you re-read my post carefully about selective tariffs. And the hundreds of thousands of HIGH PAYING jobs created would be a bigger benefit to US economy than the negative effects.
Another aspect tariff haters ignore is security aspects during a hot war. In that situation, we should never be dependent on foreign steel, aluminum and machinery.