Tariffs really are bad by mattsteinglass
May 8, 2009, 9:57 am
Filed under: Trade

On the trucks, chickens, and failing US automakers question, Ryan Avent notes:

You know, I should have closed by saying that it’s probable the Big Three are failing because rather than despite the fact that their major cash cow of the past decade was protected by a 25% tariff.

There are few areas where I agree with the CATO Institute crowd, but this is definitely one of them: long-term tariffs on manufactured goods are really, really stupid. Germany and Japan are still competitive shipbuilders and the US isn’t, and that’s in large measure because of the 1920 Jones Act, which bars foreign ships from US internal waterways and has created a protected market for US shipbuilders that has gradually destroyed their ability to build anything the rest of the world wants. And Germany and Japan are still competitive automakers, while the question of whether the US remains one is very much up in the air, apparently for some of the same reasons.


6 Comments so far
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How do you square “tariffs…are really really stupid” with forcing American workers to compete with $1/hr labor? How will that result in anything but American wage and manufacturing capability erosion?

Isn’t it immoral to separate American demand from American labor, at least to the extent we have?

Comment by The American Middle Class

Do you think large, long-term trade deficits are good for America?

Assuming you don’t, how do you suggest we remedy the situation? Adopt China’s wage structure?

Comment by The American Middle Class

The first part of the answer has to do with robots. The second has to do with floating exchange rates.

Comment by mattsteinglass

Agreed with the topic, economic nationalism is just as irrational and detrimental as any other form of nationalism. Protectionism is another way of saying you deserve a standard you never earned in the first place.

Comment by Dero

The notion that the Jones Act fleet, which consists of 100 (one hundred) ocean-going vessels, was ever a large enough captive market to distort the U.S. ocean-going shipbuilding industry into producing uncompetitive vessels, does not pass the laugh and giggle test. If you look at U.S. shipbuilding statistics the U.S. was the world’s largest builder of merchant vessels until the general collapse of U.S. heavy industry in the 1970’s (where the steel industry and the ship-building industry especially fell off a cliff starting in 1975) — over fifty years after the passage of the Jones Act. In short, you picked a really bad example.

Comment by Badtux

Cato isn’t an acronym, fyi. Its Cato.

Comment by Cato

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