Donald Trump proudly proclaims that US customs revenue is up as a result of all those tariffs he’s imposed upon imports. Great, except it’s not the foreign manufacturers who are paying these tariffs, it’s US domestic consumers who are. Don’t forget that in economics the person who hands over the check isn’t necessarily the person who is bearing the economic burden of the payment. Our employers hand over the stoppages out of our own paychecks to the government but absolutely no one is saying that our employers are paying our income tax for us.…See More
The Philippines is at least moving in the right direction with its changes to the varied protections for the rice industry in the country. It’s a simple and general rule that if something needs to be rationed then it should be rationed by price. If there are to be import protections then it is better that they are in the form of tariffs – price that is – than quantitative restrictions on the volume of rice that can be imported.…See More
The National Farmers’ Union is trying it on again as they say that Brexit will lead to more expensive food in the UK. The problem here being that their own evidence given shows entirely the opposite. They insist, rightly, that exports to the remnant-EU will be hampered by the high tariffs the EU imposes on food from outside it. Quite true – but then that means more UK grown food to be eaten in the UK.…See More
That tariffs on imported steel mean a loss to the American economy is obvious – by definition those tariffs make steel inside the US more expensive. This reduces the living standard of consumers which isn’t the thing we’re trying to do with an economy at all. We also know this doesn’t increase the number of jobs in the domestic economy, quite the opposite. Our evidence is that – from the Bush tariffs – more jobs are lost in steel consuming industries than are added in steel producing ones:
200,000 Americans lost their jobs to higher steel prices during 2002.
Bloomberg tells us that the costs of Trumps technology tariffs is $1 billion a month. That’s the amount that is actually being paid in tariffs that is, the amount that the 10 and 25% rates on technology from China are bringing in in revenue. The problem with tariffs – as with near any other form of taxation – is that there’s a deadweight cost as well. A cost of imposing the tax which isn’t the revenue which is received.…See More
Donald Trump’s aim with his import tariffs is to try and insist that less is made and manufactured outside the United States and then consumed within it. This is because he and his trade adviser, Peter Navarro, are in the grips of the delusion that balanced trade matters. Even, the absurdity that exports are the point of trade rather than it being the imports which make us richer. Their particular ire is aimed at China which makes all sorts of things which Americans want to buy.…See More
This is one of these ideas that the ill-informed do keep bringing up – let’s have a tariff on Apple’s iPhones so that the electronics giant makes them in the United States. The problem with this being that Apple already does, to any reasonable definition, make the iPhone in the US. Thus President Trump’s latest musing on the idea is very silly indeed.
To understand this we need to grasp the difference between “make” and “assemble”.…See More
President Donald Trump is hailing the money pouring into the Treasury from those import tariffs that have been imposed upon those things we all like to buy from foreigners. Confident claims that this will pay off the national debt and all that. There are three problems with this sort of claim.
The first is that the people paying the tariffs are American consumers, the price of things they buy has risen as a result of the taxes.…See More
As standard economic theory tells us, tariffs are a bad idea. Once we’ve accepted the basic idea of comparative advantage – we all do what we’re least bad at and swap the resultant production – then the more people we can comparatively advantage with the better. There is no dividing line between it being a good idea to trade with the bloke next door or the one in the next city, county, country or continent.
Putting tariffs in the way of this at the level of the nation state makes this process more inefficient – just as it would be if there were a tax on swapping carrots for apples with next door.…See More
Apart from a stream of winks and tweets, the most authoritative PowerPoint presentation on the “new Mexican free-trade agreement” is at Reuters.
The North American Free Trade Agreement (NAFTA) drastically reduced trans-border barriers, amplifying commerce even as it disrupted specific jobs. (However, see Tim’s recent article on things that threaten jobs.) President Trump falsely argued that NAFTA was dramatically bad, presumably on the grounds that Clinton-Bush-era negotiators favored commerce while Trump favors workers. Regardless of that, Trump won election, surprisingly carrying the “rust belt” states such as Michigan.…See More