Equal tariffs: an essential part of the economic fix

Discussion in 'Economy' started by Wonky Pundit, Jun 8, 2011.

  1. Wonky Pundit
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    Wonky Pundit USMB's Silent Snowden

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    Want to know one of the top reasons that so many jobs have gone overseas? In the US, tariffs on manufactured goods (where they exist at all) average anywhere from 2-5%. In China, that rate is about 22%. In India, it’s 40%. Why aren’t patriotic Americans talking about this?

    Genuine free trade, by definition, and its resulting benefits can’t exist unless both trading partners are playing by the same rules. Because "trade" is a two way street, "free trade" can exist only with equal tariffs – whether the rate is 0% or 50%. Without the balance, a much lower American import tariff just contributes to the erosion of our borders (and sovereignty) and an open door for the world to plunder our economy. The result would be, and has been, an exploding trade deficit that, if left unchecked, will eventually, maybe rapidly, destroy what’s left of the economy.

    When other countries have much higher import tariffs than we do, here’s what happens:
    First, their industrial base gains advantages from its protectionist tariffs if we don't match theirs. These manufacturers enjoy reduced or zero competition from their US counterparts. They can take the resulting increased profits and use them for R&D, better manufacturing equipment, and so on. Then, their products become even better and cheaper, making it difficult if not impossible for American manufacturers to compete in our own market as well as in the global market. All Americans suffer from this.

    Second, lower import tariffs in the US don’t encourage the reduction or elimination of tariffs by other nations. They simply have no incentive. The purest model of free trade will only be achieved through the imposition of matching tariffs. The unilateral imbalance of US tariffs works against the pursuit of global free trade.

    Free market absolutists will counter these arguments by claiming that any restrictions on trade impoverish those who are restricted. What they don’t realize is that this rule only applies to the consumer from the country with the high tariff and not to the manufacturer from the country with the lower tariff. You can’t ignore either one.
     
  2. expat_panama
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    expat_panama Silver Member

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    --and studies prove that 93% of statistics posted on political forums are made up.

    OK, I know we could all come up with links to web-site rants by failed complaining union workers, but first let's follow the logic that says wanting America to be more like China is patriotic. Like, after we have high import taxes like the Chinese then maybe we can send half our population off to scratch food from the ground just like them.

    Some say our economic recovery with 9.1% unemployment is the worst recovery ever and others say it's because import taxes are too low. The fact is that the 1933-1937 'recovery' had 25% unemployment and the difference was back then we collected duties on half of imports compared to our current 4% (here's one link from a big bunch of links for the tariffs, and here's where you get employment stats).

    Some folks love high taxes and I don't, it's got nothing to do with patriotism because everyone serves America in different ways. Hey, some people volunteer enlist for the military and some people volunteer donate extra money to the federal government. If you think America needs more import taxes then you donate the same percentage of your income that I volunteered for my time in the service.
     
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  3. pinqy
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    pinqy Gold Member

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    Differing tariffs are irrelevant. The only question to be asked is whether or not you are better off making the trade. Trades don't have to be equal, all that matters is whether or not you benefit from it.
     
  4. Wonky Pundit
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    Wonky Pundit USMB's Silent Snowden

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    Hey, if you want links, just ask. :eusa_eh:

    Not what I'm implying at all. I'm saying only that if China knows that the tariffs we charge on their imports match what they charge on ours, China will then have a strong incentive to lower theirs.


    Which has nothing to do with the argument. Those duties weren't mirrored tariffs.

    Donating to the treasury is not going to help the trade imbalance.
     
  5. Wonky Pundit
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    Wonky Pundit USMB's Silent Snowden

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    Agreed, and I've just demonstrated why we're not benefiting.
     
  6. expat_panama
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    expat_panama Silver Member

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    The idea being higher tariffs increase employment.
    This means the employment creating tariffs are 'mirrored'.

    Every trade treaty has proponents that say it's mirrored and opponents that say it isn't. Where we need to go is saying what are we changing in which agreement. Some posters on these threads want 100% tariffs on all imports w/ scrapping all trade agreements. Besides being stupid it's also not going to happen in real life on this planet.
    This is a new tack, not only because trade imbalances can go either way regardless of how 'mirrored' the tariffs are, but also because we were talking jobs-- [​IMG]

    --and increasing trade deficits come with low unemployment and vice versa; our choice is whether we want more jobs or a trade surplus.
     
    Last edited: Jun 9, 2011
  7. expat_panama
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    expat_panama Silver Member

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    Pinqy can correct me if I'm guessing wrong, but my take is that he's talking about the individual and not the collective, and that the only person who can decide if an exchange is good or not is the person making the exchange --not the state. That's pretty much my view too, that people are good and can run their own lives. The people tell the state what to do and not the other way around.
     
  8. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Not in China.
     
  9. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    A tariff war is a bad thing for everybody. One of the reasons why the great depression of the 1930s was as bad as it was is due to a tariff war that broke out as a result of the Smoot Hawley legislation. You raise tariffs on incoming products, the other countries raise theirs, and presto you got a trade war that beggars everybody.

    Look - say Amercian companies can manufacture product X at price A. But a foreign company produces it for A-10 bucks, a cheaper price. So the American consumer buys the foreign product, right? So the American companies lobby the congress for a tariff, which they do. Now the American consumer has to pay an extra 10 bucks for the product for either the American or foreign product, which means they now have 10 fewer dollars to spend on something else. So their standard of living went down, cuz now their money doesn't buy as much as it used to, right? AND, that 10 bucks they lost in purchasing power shows up in some other sector that is now getting less demand by 10 bucks per consumer. Great, you saved the jobs for the American companies that receive the benefit of the tariff, but lost jobs in other companies cuz they lost business. Net result of tariff: FEWER JOBS. LOWER STANDARD OF LIVING.
     
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  10. Mad Scientist
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    Mad Scientist Deplorable Gold Supporting Member Supporting Member

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    Ok Chief, so answer me this. Without using tariffs (which I'm in favor of) how do we turn our country around from a service economy to a manufacturing economy again?
     

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