We had a tariff because that was the only feasible means of raising taxes and the government had to be funded. It was understood by those familiar with economics that a tariff retarded growth in the overall economy. So we had no choice.
It was also a special case for protection because our economy had been deformed by colonization and needed to be properly adjusted to the world market not just the British. The tariff had several functions and combined a revenue tariff with a protectionist tariff it was not meant to be permanent. Protecting inefficient and less productive firms was not their intention.
You can say that a tariff increases overall wealth as many times as you like but that is not and cannot be true. Less productive firms draw resources from MORE productive industries hence productivity MUST drop and wealth creation slowed. It is simple LOGIC.
“Labor arbitrage” does not exist unless you assume free movement between countries and even then it is iffy.
Industrial base is doing fine and will be even better in a year. We will never make low-price crap again. We make equipment of immense sophistication and high value. Yesterday’s industrial base will change to retain its top position.
China’s tariff effects, for example, all foreign auto manufacturers the same so we are not at a disadvantage to car makers anywhere. That is generally the case with other products.
And China is no competitor in the high value products.
I reply to you because you are a wealth of incorrect ideas so it tests my ability to respond to such folly. Intriguet reasoning is involved in getting to the bottom of these issues.
Ignore the International Division of Labor.
Pay no attention to the markets which have evolved to an optimum when the government stays out of them.
You want to restrict citizens choices as to what to do about spending their money.
You are blind to the fact that a tariff is NOT paid for by foreigners IT IS PAID BY THE CONSUMER.
Yeah that is a program for success all right, a government imposed price hike.
Another reason I respond is to defend Freedom vs government every time.
Hey, “a.s.”, “c.v.”, I’ll comment (and probably get slammed from both sides!)
I disagree with cv about tariffs as a general “tool” to use - we’ve been back and forth on that in the past and I don’t have time to re-argue that again tonight! Suffice it to say that having been in industry, my experience is that things we do to hamper ourselves, and bad trade deals, do more damage to US industry than, say, cheap labor overseas. Tariffs all-around to “fix” that in general will do more harm than good. Instead, reducing and simplifying regs will help, we’ve now made some progress on taxes, and I think we badly need to incentivize company job training and education of new employees — instead of relying on “the State” to do that. And so on.
However, I also certainly think that in some specific areas, such as to protect defense related industries, tariffs can be useful or even necessary. That does cover quite a bit of ground: Assuming we do not go isolationist (almost guaranteeing at least a 100 or more nuclear warhead exchange in the next 50 years or so, IMO), the next most alarming prospect is a more conventional war in which the US may have to field a force of a few million or more soldiers for a protracted period, something like WW2. That is, I expect someday a conflict that requires a true “national effort”, not these relatively minor affairs we’ve been in since WW2.* I don’t expect such in the next 10 years or so, and hopefully it will not occur in my lifetime, but... I think the likelihood of such a war is at least 50% in the next 50 years or so. If we get another Obama after Trump, that goes to 70%. If we get 16 years of “Trump-Pence-ism”, make it 40%.
*Note that even in these minor wars we have had sometimes unforgivable war supply shortages.
This is very problematic if one doesn’t have the necessary industrial base: Factories to provide even things like boots that will wear well with hard use, and not also have severe shortages at home, are essential.
a.s., you say our industrial base is doing fine and will do better soon (true, on a $$ basis), and we don’t need to make low end crap. (likely true again.) Companies like Toyota and Subaru are doing quite well, manufacturing in the US. But our industrial base is still NOT employing the MANY millions who have dropped out of the labor market entirely — a market much too dependent on low to low-mid paying service and health care jobs. And you entirely ignore “mid-end” products, which is where a great deal of US production has disappeared. Let me give you an example:
Up to just a couple years ago, I was involved in the development of a consumer product that was targeted to (roughly) the top 10 - 1% of that product market. That is, we expected the pricing (roughly $1300.00 “street price”) to exclude (too high) 90 % of consumers interested in such products (and really, more likely, more like 95% of consumers of such products, but we might convince a few in the 90-95% range to spend more money.) The top 1% or so we expected to be interested in more exotic, pricey products (tho’ a few might purchase for their kids, etc.) This company has US production facilities, excellent design and production engineering, and has done well for many years, creating great brand reputation. Surely we could make this product competitively in the US, right?
Are you kidding? It was not even close. At best, we thought it might work out where we would bring in subassemblies and do final assembly and QC at our factory. Cost would be higher than bringing in complete assemblies from overseas, but, we would hopefully have fewer rejects, and catch more problems before they got out into the field. (Chinese companies love to claim they are ISO [QC] this ‘n that, but the reality is a lot uglier. Apparently, even many of the best just lie. Or something, because, well, “ridiculous” stuff gets past their QC far too frequently.) Eventually, the Marketing Dept. killed the project, choosing instead to focus our resources elsewhere. At least the company allowed a couple of us engineer / tech types to keep prototypes @ home to “continue field testing”. :-)
I ran into the above sort of thing (well, not that very last part) over and over, since ~ year 2000 especially. Entire industrial bases just dried up. I cannot accept that US industry is healthy when in area after area after area, US production can only compete in the top 5% (or less!) of the market!
Now let’s go back to Subaru: 2017 Outbacks for the US market were made in Indiana... but with a total domestic content of only 42.5 percent. (That said, the Toyota Camry is 75% - not too bad... Note that these figures vary a bit depending on the analysis — for example, the 75% mentioned does not really reflect the profits going mostly back to Japan, R&D done there, etc. And... How many parts come from a potential adversary: China? Hmmm...)
Can we really depend on Toyota to produce APC’s for us in 2050, if push comes to shove? Or will, say China, have leverage over them, then? Or will certain types of parts come only from adversary countries? Do we want to bet our soldier’s lives, or our freedom, on that?
Another example: The medium price General Tire “Altimax” snow tires I bought recently (and the same ones a few years ago) are made in Germany. They are flat out some of the best snow tires around, especially for the money, and for sure nothing made in the US seriously competes with them. Now, seriously, “pardon my French”, but, WTF?!! The freaking socialist GERMANS can make and ship to us a better tire for the money than US companies can make here??
Less serious, perhaps, but still illustrative: USPS subsidizes cheap shipping for 3rd world sellers / shippers selling to US customers, by charging higher rates to US shippers. So, if I order this really great little flashlight from China (way overrated, but still brighter than all get out, plus it has “zoom”, 10 for $17.50, free shipping), yes, they can ship ‘em for free. But I get clonked on cost if I ship a Christmas package to my out-of-state brother. Or if a US seller wants to sell those flashlights individually, even if they bought in such bulk that their cost per unit approached “free”, shipping even locally would make the item more expensive than a consumer buying one & shipping it from China! Who in bloody hell determines such policies???!!!
A bit of an aside: The problem I see with Chinese import tariffs is that basically nobody can sell all sorts of items into China at reasonable volumes & prices. I don’t give a hoot as to whether the French or anybody else have the same problem trying to sell, say, motorcycles into China, as we do. The point is that, for example, Harleys are actually quite prized in China, and presently there actually is a reasonable potential customer base (small% of population x huge population), but Harleys cost 2x there what they do here! WE can’t effectively sell there at all. (Source = NBC story, a few years ago.)
Last, a.s., you mention that in the early years of the US, our economy had been “deformed”. True. But it’s only fair to point out that our economy in the last 50 years or so has been pretty mangled, at least compared to what and where it SHOULD be.