May 14, 2018
Trade Benefits American Workers, Businesses, and Consumers
Post by Freedom Partners
As policymakers, stakeholders and the general public gather for a public hearing of the Office of the U.S. Trade Representative (USTR) on U.S. imposed tariffs on goods from China, we hope they will consider the dangers such policies have on our nation’s businesses, workers, and consumers. In the wake of historic tax reform passed at the end of 2017, the U.S. economy is rolling. Barriers to trade however, threaten to undermine this growth and would serve as a de facto tax increase on the American public for whom tax cuts were intended to provide relief.
Trade’s Benefits are Win-Win for Americans
Trade is a key part of the economy and promotes well-being and prosperity. It enables mutually beneficial relationships between individuals, companies, and countries by providing access to a variety of goods and services that benefit most people. As recent U.S. tariffs target China, it’s important to observe how current trade between both countries is beneficial to our nation.
China is one of America’s biggest export markets, and the 2nd largest for agricultural goods. Trade between our country and China not only allows both to benefit from access to exported goods and services, but also allows our farmers, workers, and manufacturers benefit from finding customers for their products and services. By expanding trade, we continue to benefit from access to imported goods and available consumers of our exports.
Tariffs are a Lose-Lose Option
New taxes in the form of tariffs imposed on products and raw materials essentially undermine the benefits American households are seeing from the tax reform. Businesses facing higher costs of goods and materials will pass these down to American consumers in the form of higher prices on consumer goods.
Ultimately this protectionist policy is a lose-lose for consumers, farmers, workers and manufacturers across the nation. We’ve seen this happen before, as tariffs imposed under the George W. Bush administration in 2002 had the opposite impact of their intended impact as 200,000 jobs across the economy were lost.
These tariffs also hurt our trading partners, who often impose new tariffs in retaliation. We can observe this in the recent news as China has enacted counter-tariffs in retaliation and reportedly stopped purchasing soybeans. This action particularly puts pressure on American farmers with China as a major trade partner.
Businesses also face uncertainty as The Wall Street Journal notes, uncertainty surrounding government policy can hold back investment or slow down purchases as businesses become more cautious. Businesses are beginning to reap the benefits of regulatory roll back and tax cuts under the Trump administration, however, these protectionist threats are causing new concerns.
A Better Solution
There are legitimate concerns with some trade practices of our global competitors, however, tariffs are not the best way to address them. Instead, the administration should focus on negotiations to identify concerns and reach a consensus on how to solve them with China and with our global trading partners. Next, lawmakers should continue pursuing ways to increase the competitiveness of U.S. companies instead of enacting barriers. Getting rid of corporate welfare such as agricultural subsidies would be a good start and allow for more economic freedom.
Washington must pursue policies that open new markets and solve concerns with our trade partners. Ultimately, it is the well-being and prosperity of American consumers, workers, and businesses at stake.