In the last election and on the global stage, President Donald Trump talked tough on trade. It’s us versus them and we’re losing, he says. Put simply, he views the current trade deficit, when we import more from a country than we export to it, as detrimental to American jobs. Since January, that trade deficit is $264.4 billion.

Our biggest trading partners, China, Canada, Mexico, and Japan have been able to sell more to us than we’ve sold to them, and that has left us worse off, says Trump. Tariffs, taxes placed on specific products that enter our country, will help balance that.

But that isn’t true.

To begin, tariffs raise costs for foreign firms, but that means that American businesses that rely on imports to source their products will themselves face higher costs. And that gets passed on to the consumer.

What’s more, globalization has made the cost of sourcing products from foreign markets much cheaper. Supply chains are now global, and that’s a good thing. It’s made products cheaper for consumers and producers alike.

In response, countries may retaliate. Then, we’re looking at all-out trade war. Kentucky bourbon, Harley Davidson motorcycles, cigars, and even peanut butter exported to the 28 European Union countries will have additional tariffs beginning Friday. Canada and China have threatened more.

That’s bad news for both workers and consumers, regardless of who fired the first shot.

North Carolina exports $32.6 billion of goods and services, according to the International Trade Administration. Over 150,000 jobs directly rely on exports of chemicals, transportation equipment, machinery and more. More than 36 percent of those originate from the Charlotte area.

Who will be the most affected by tariffs? Think beer drinkers and employees at automobile assembly plants, as well as pork farmers and agricultural machine companies. And everyone who depends on these industries.

North Carolina brewers have warned that tariffs on aluminum and steel will affect their bottom line, potentially raising the price of beer for you and me.

Daimler and its subsidiary Mercedes-Benz project that retaliatory tariffs will hurt profits. That affects plants in Gastonia, Cleveland, High Point, and Mount Holly, and Charleston and Gaffney in South Carolina, which employ more than 6,500 people. Thousands more will be indirectly affected.

Both states voted for Trump in the 2016 presidential election. Why would he punish those voters with tariffs that will hurt investment and affect jobs?

There are thousands of goods produced here that rely on parts, commodities and special technologies from abroad. And millions of consumers and workers depend on trade of those goods for their well-being.

The U.S. is the dominant economic power because of decades of free trade and free enterprise. Workers and consumers in North and South Carolina benefit when products flow freely across our borders, and we’re better off for it. Tariffs are a step backward.

Yaël Ossowski is a Charlotte-area native, economic journalist and deputy director at Consumer Choice Center.

Original link: https://www.charlotteobserver.com/opinion/op-ed/article213598444.html

To the Trump protectionist hammer, every product imported looks like a nail.

On Monday, we learned that President Trump’s trade enforcer, U.S. Trade Representative Robert Lighthizer, announced new tariffs on solar panels and washing machines assembled outside the U.S.

For washers and dryers from companies such as Samsung and LG, steep tariffs as high as 50 percent will be applied while solar panels assembled abroad face a duty of 30 percent for the next year. These tariffs act as taxes on foreign companies who wish to do business in the U.S.

To the casual observer, the biggest losers of these tariffs appear to be India, Korea, and, most of all, China.

But considering that millions of American consumers depend on imports for dozens of their appliances and goods at home, these measures end up hurting them the most instead.

Nearly 95 percent of Americans shopped at a Walmart in 2016, a retailer which offers low prices by a vastly robust supply chain with links all over the world. Is it really inconceivable that prices would have to rise in order to overcome the import barrier imposed on the various actors in that supply chain?

Without question, targeted tariffs may benefit one particular American company by increasing the costs of doing business for its foreign competitors. But that means prices for ordinary consumers and businesses that depend on those imports must rise, making them less affordable.

An analysis by the Wall Street Journal on the effect of steel tariffs in 2014 demonstrated that the higher cost of imported steel raised prices as much as 60 percent on products which use steel as a base metal. Domestic steelmakers such as U.S. Steel may have gained in trade volume and stock price, but companies that rely on cheap steel for their products were forced to raise prices and restrict supply – and that was bad for American consumers.

When the Department of Commerce announced a 300 percent tax on imported jets from Canada, domestic airlines balked. And with good reason. Now they will have to pay a premium to source their fleets, causing the price of air travel to rise for ordinary consumers.

The fact that China subsidizes its various industries is no doubt a concern for American manufacturers, and it should be.

A look at the United States International Trade Commission’s website finds dozens of China’s alleged manipulations: aluminum and steel tubing, wooden cabinets, paper products, and fluorescent lights.

But though slapping tariffs on every product deemed harmful to American industry may be well-intentioned, it has a demonstrated negative effect on the consumers Trump purports to help.

Low tariff rates since the 1980s have been a boon to shoppers and domestic manufacturers who rely on imports to sell to Americans.

No doubt, throughout the course of his campaign, President Trump pledged his support for American workers in manufacturing. But with advances in technology and streamlined processes, our economy is beginning to produce more engineers than part-assemblers. And that allows more and more Americans to raise their standard of living at a fraction of the cost.

It’s been 88 years since the disastrous Smoot-Hawley Tariff exacerbated the worst effects of the Great Depression, igniting an international trade war that made everyone worse off, as revealed in a 2003 paper by the New York Federal Reserve.

President Trump is still celebrating the victory he achieved with the massive tax overhaul in Congress, lowering taxes for entrepreneurs and workers across the country.

If Trump would like to help American workers, consumers, and companies, he’d be wise to not impose yet more government regulation and taxes on the imports that so many of us rely on.

A tariff, we should remember, is just another name for a tax.

Yaël Ossowski (@YaelOss) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is deputy director at the Consumer Choice Center and a senior development officer at Students For Liberty.

Original link: https://www.washingtonexaminer.com/workers-cant-afford-tariffs-or-a-trade-war-president-trump/article/2646883

Last week, the US Department of Commerce released a statement in which it announced new tariffs on Canadian plane imports. The description “Duty Determination on Imports of 100- to 150-Seat Large Civil Aircraft From Canada“ will sound oddly specific to most readers, but very familiar to people interested in civil aviation. One-hundred to 150-seat Canadian aircrafts are currently being produced by Bombardier — rivalling Boeing and Airbus on the U.S. market.

The American airline Delta, which has ordered 75 of Bombardier’s C-Series jets, will not be able to purchase the aircraft if the US tariff of 220 percent would be imposed. Delta has claimed that Boeing does not produce a comparable aircraft, which is why they decided in favour of the Canadian competitor.

It is notable that the imposition of this tariff could bring the Canadian producer into major financial difficulty, as it would triple the price of the C-series and endanger thousands of Canadian jobs. This also includes the UK’s Northern Irish region around Belfast, which produces the wings for the planes, which has lead British Prime Minister Theresa May to hint at a possible trade with with the U.S. over aircraft production.

Canadian Prime Minister Justin Trudeau denounced “Boeing’s protectionist and baseless measures,” saying the Canadian government does not want to “do business with a company that is attacking us and wants to lay off tens of thousands of people.”

The U.S. government is clearly taking sides in the competition between major companies, and is making trade relations difficult with its closest partners. Both Canada and the UK will be majorly important in the establishment of mutually beneficial trading relationships, especially once Britain leaves the European Union.

Ruling in favour of crippling tariffs doesn’t reflect well on the Trump administration, as it neglects both the political and market consequences of the decision.

The participation of Bombardier on the market is a major asset for price competition and pushing for innovation. The U.S. has dominated the world economy because it was able to trade competitively and with innovative products. If the administration leaves aircraft productions in the hand of one company, then it lifts the burden of the search for the competitive advantage of the shoulders of this firm.

From a consumer position, barring Bombardier from the market can lead to higher costs, as airlines will either have to buy aircrafts it doesn’t want for the price one company has dictated or not buy a plane at all. As competition is being reduced, the choices for the consumer shrink simultaneously.

In an era of cheap aviation, the U.S. should support competitive and innovative markets, not dwell in the nostalgia of past technological achievements. American companies and consumers alike will profit from more, not less free trade.

Bill Wirtz is a political commentator currently based in France. Originally from Luxembourg, he writes columns about politics in Germany, France, and the U.K., as well as about policy emerging from the European Union. His articles have been published by Newsweek, The American Conservative, the Washington Examiner, and the Mises Institute. He is a Young Voices Advocate, a regular contributor for Rare Media and the Foundation for Economic Education, and works as a Policy Analyst for the Consumer Choice Center. To read more of his reports — Click Here Now.