EBATING CURRENT ISSUES: Tariffs and Trade Tariffs are taxes on imported goods. S
ID: 1104997 • Letter: E
Question
EBATING CURRENT ISSUES: Tariffs and Trade Tariffs are taxes on imported goods. Supporters say tariffs protect American jobs, while critics reply that they hurt consumers by making imported products more expensive. Should industries be protected by tariffs? al among millions of consumers worldwide. Trade brings new technology to poor countries and protects In this debate from The Wall Street Journal Classroom Edition, Jock Nash, a lawyer who represents textiles producer Milliken&Co.;, and Daniel T. Griswold, an associate director of the Center for Trade Policy Studies at the Cato Institute, discuss whether the United States sould set tariffs on imports to protect American industry. t's a myth that manufacturing has declined in the n import tariff is a taxing international trade, tariffs impose higher because better-educated Americans US. because of trade. American workers can and do tax, plain and simple. By compete successfully with lower paid foreign workers produce so much duct whose costs and pricing reflect the realities of the U.S. market. Without protection of some kind-like a tariff-US. manufacturing workers are forced to compete head-to-head with foreign workers in the same industry who may be earning pennies an hour here is little made in America that cannot be This situation applies to every US. industrial sector, made cheaper and just as well elsewhere. This is from advanced technology products to basic industries made clear by our nation's chronic and growing Nations become great by producing, not con.suming manufacturing trade deficit-which is running at the Manufacturing, not trade, is the main source of pros rate of $1.4 billion dollars a day. Currently, we are con perity. Manufacturing is the engine that increases suming more than we are producing in goods and ser. national productivity and creates wealth. It is worth YES Should industries be protected by tariffs? prices on millions of workers, families, and more per hour of work. Indeed, US. factories today number of "protected domestie producers. industries for the benefit of a small produce a greater volume of goods cated products than in decades past. Those jobs that Consider steel and ment imposed tariffs of as teel. But domestic steel producers, to improve their sugar. In 2002, the US govern have migrated overseas tend to be the lower-paying much as 30% on imported manufactunng jobs in industries that have been in decline for decades. Protecting such industries with their prices in line with the now tarifs just keeps wages down by slowing our transi- higher-priced imports. As a result, the tarifis kept a tion to higher-skilled and better paying jobe, few extra US. steel mills open by allowing them to raise their prices. However, those higher prices hurt American workers in steel-using industries, such as automobiles, home appliances, and construction. In the same way, restrictions on imported sugar benefit a small number of domestic producers at the expense of candy makers and soft-drink producers. And millions of families suffer because they must pay more for al vices, by a margin of a million dollars a minute U.S. Trade Deficit, 1994-2004 A growing part of this deficit is attributable to Us based companies moving overseas part or all of their Period (millions of dollars Imillions of dollars) millions of dol production of goods and services destined for consump tion in the U.S. market-not in foreign markets, as the companies claim. Obviously, these companies would not manufacturing offshore if a tariff prevented their products from entering the US. market at a profit. Imagine how much poorer your family would be if 1998 you had to grow your own food and make all your own clothes, furniture, and appliances. The same truth applies to nations. Trade allows people and countries 2001 to specialize in what they do best, exchanging their2002 surplus production for what others can produce most2003 efficiently Through economies of seale-meani more you produce of any given produet, the less each Sourcs U.S. Censs Br tem costs to produce-trade reduces the cost of such The trade deficit has widened as more and more manufac- In 2003, US. manufacturing employed 16 million 445,438people. This was after losing two million manufaetur- 1,365,399ing jobs in 24 months. Most reports indicate that the 382,145 majority of these newly unemployed workers drop out of the middle class only to join the countless working in the service economy. They are not finding new ls as automobiles, jet airliners, and medicines by spreading the high, up-front costs of research and ca The move to put production of goods destined for sale in the US. in other countries effectively destroys the ability of many American workers to earn a good living, as they traditionally have, by adding value to a tured goods sold in the United States are imported from other C Many factories have closed down as manufactur- ing jobs have left the United States for countries with cheaper labor Would higher tariffs help orExplanation / Answer
Griswood has more compelling argument, but protection to the industries that are in nascent stage, and or the industries of strategic importance should be given. Over a period of time, these protection should be removed in a phased manner to make the industry competitive in the international market. Griswood is right to say that protection brings incompetency and higher prices, though it comes when protection is for a prolonged period of time. Further, the protection creates redistribution of jobs because if protection gives life to a few companies , then it also contributes to the closure of other companies due to the lack of demand. Here, lack of demand takes place due to the more disposable income spent on highly priced goods of the protected industry. Hence, disposable income wipes out.
Nash is more focused upon the companies moving out of the USA and a decreasing number of jobs as a consequence. But, it has not to do with the protection. The protection is to be given against the imports in the country rather jobs leaving out of the country. Putting excessive pressure on these MNC companies can make them move permanently out of the USA. Hence, Nash has not put the actual argument such as nascent industry status, saving of jobs or security of the nation.
There needs to be a suitable industry development policy where the pricing of the product, and cost of factors of production should be revised. It will help the gods to be low priced, competitive and more salable. It will not only bring the benefits of the international trade, but also it will prevent the jobs going out of the country.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.