Loading...
The Mayor and City Council have an annual budget of over $450,000 per year dedicated to themselves for salary, training...

We are shooting ourselves in the foot with tarriffs

walter williams

Walter Williams

Loading…

Wednesday, July 11, 2018

The Canadian government, lining the pockets of its dairy producers, imposes high tariffs on American dairy imports. That forces Canadians to pay higher prices for dairy products. For example, Canadians pay $5.24 for a 10.5-ounce block of cheddar. In Washington, D.C., that same amount of cheddar sells for $3.64. Canadians pay $3.99 for a 1-pound container of yogurt. In Washington, D.C., you can get nearly twice as much yogurt for a little over $4. It's clear that the Canadian government's tariffs screw its citizens by forcing them to pay higher prices for dairy products.

What should the U.S. response be to Canada's screwing its citizens? If you were in the Trump administration, you might propose imposing tariffs on soft wood products that Americans import from Canada — in other words, retaliate against Canada by screwing American citizens. Canadian lumber — such as that from pine, spruce and fir trees — is used in U.S. homebuilding. Guess what tariffs on Canadian lumber do to home prices? If you answered that they raise the cost and American homebuyers are forced to pay higher prices, go to the head of the class.

This retaliation policy is both cruel and not very smart. It's as if you and I were in a rowboat out at sea and I shot a hole in my end of the boat. What should be your response? If you were Secretary of Commerce Wilbur Ross or Secretary of the Treasury Steven Mnuchin, you might advise retaliating by shooting a hole in your end of the boat. If I were president, I'd try to persuade officials of other countries not to serve special producer interests by forcing their citizens to pay higher prices. But if they insisted, I'd say, "Go ahead, but I'll be damned if I'll do the same to Americans!"

The ruse used to promote producer interests through tariff policy is concern about our large trade deficit. It's true that we have a large current account trade deficit. However, that's matched exactly by a very large capital account surplus. Translated, that means Americans buy more goods from other countries than they buy from us; that's our current account deficit. But other countries find our investment climate attractive and invest more in the U.S. than we invest in other countries; that's our capital account surplus.

Have you ever wondered why foreigners are willing to invest far more money in Texas and California than they are willing to invest in Argentina and Venezuela? Do you think it's because they like North Americans better than they like South Americans? No. We've always had an attractive investment climate, and we've had current account deficits and capital account surpluses throughout most of our nation's history (http://tinyurl.com/jczqrhu). In fact, the only time we had a sustained current account trade surplus was during the Great Depression, when we had a surplus in nine out of 10 years, with 1936 being the lone exception.

Let's delve a bit into the politics of trade tariffs. Whom do we see spending the most resources lobbying for tariffs on foreign steel and aluminum? Is it American users of steel and aluminum, such as Harley-Davidson and John Deere? Or is it United States Steel Corp. and Alcoa? Of course it's U.S. Steel and Alcoa. They benefit from tariffs by being able to sell their products at higher prices. Harley-Davidson and John Deere lose by having to pay higher prices for their inputs, steel and aluminum, and their customers lose by having to pay higher product prices.

There's a lot of nonsense talk about international trade, which some define as one country's trading with another. When an American purchases a Mercedes, it does not represent the U.S. Congress' trading with the German Bundestag. It represents an American citizen's engaging in peaceable, voluntary exchange, through intermediaries, with a German auto producer. When voluntary exchange occurs, it means that both parties are better off in their own estimation — not Trump's estimation or General Motors' estimation. I'd like to hear the moral case for third-party interference with such an exchange.

Walter E. Williams is a professor of economics at George Mason University. 

Loading…

Humans of Greenville

@HumansofGville

Local photographer Joe Pellegrino explores Greenville to create a photographic census of its people.

Op Ed

February 15, 2019

On Bleecker Street in Manhattan, you can find both a Planned Parenthood clinic and a boutique for pregnant women.

According to Vogue, the store, Hatch, "is arguably the first of its kind, in that it was designed specifically for pregnant shoppers: Changing rooms have a size chart to help you figure…

kathrynlopez

February 15, 2019

The decision by Virginia's top three elected officials to hunker down and cling to their jobs is bad for both the state and the Democratic Party. If they won't go, the only thing to do is investigate them all.

Gov. Ralph Northam, Lt. Gov. Justin Fairfax and Attorney General Mark Herring have all…

Eugene Robinson

February 14, 2019

Of all the headlines about the scandals concerning the alleged past sins of one after another high official in Virginia, one struck me most poignantly. It was this, from the front page of The Washington Times:

"Democrats to vet candidates closely for secrets in past."

Maybe I have spent too much…

February 13, 2019

As our new legislative session fully uncoils, it's good to recall that just a few weeks ago workers in 20 states saw an increase in the minimum wage. The federal minimum, $7.25, was last raised in 2009. Since then, 29 states and dozens of cities and counties have chosen to exceed the federal floor.…

Gene Nichol

February 13, 2019

President Trump, in his State of the Union speech, broadly and wrongly portrayed illegal immigrants as murderers, rapists and drug dealers who must be stopped. But Trump does not limit his anti-immigrant zeal to them. In service to Trump, authorities are now handcuffing and shackling non-citizens…

Take Back North Carolina Press Conferece - US Attorney Robert Higdon speaks at press conference.jpg

February 13, 2019

Ten states and Washington, D.C., have legalized the recreational use of marijuana. Twenty-two other states, along with U.S. territories Puerto Rico and Guam, allow marijuana to be used for medical purposes. Let's examine some hidden issues about marijuana use.

Before we start, permit me to…

Walter Williams

February 12, 2019

Serving as speaker of the House has been good for Tim Moore's bank account.

The job of speaker isn't itself lucrative: $38,151 annually, plus $104 a day for housing and food when the legislature is in session. That's a decent income for many North Carolinians, but it's not going to buy you that…

Colin Campbell

February 11, 2019

North Carolina's franchise tax is a punitive and opaque tax levied on businesses organized under one of the usual corporate forms. It is inconsistent with both good economics and good government and should be abolished.

Conceptually the franchise tax is quite simple. It is a tax on the net value or…

Roy Cordato

February 11, 2019

There is a reason why most rural communities in North Carolina do not have broadband speeds of 25 megabytes per second, even after the state has spent more than $500 million on infrastructure over the last 10 years.

According to internet service providers, or ISPs, it is simply not profitable to…

021019bunnysanders

February 11, 2019

Richmond Times-Dispatch

Despite threats, pleas, and entreaties from senators and citizens, Democrats and Republicans, former governors and most of the General Assembly, Ralph Northam remains Virginia’s chief executive — at least the last time we checked. And it appears, according to the…

317 stories in Op Ed. Viewing 1 through 10.
«First Page   «Previous Page        
Page 1 of 32
        Next Page»   Last Page»