U.S. Tariffs

TariffsDespite a long history of using protective tariffs, the US is now one of the lowest tariff-setting countries in the world. The goal of low tariffs is to increase competition and reduce prices. However, the US has also achieved major job and income losses.  The US’s tariff setting strategy is unlike any other. While most countries raise tariffs on certain industries to help them develop over the longer term, the US has almost unilaterally applied a low-tariff rate. These low tariff rates put the U.S. businesses and workers in the worst position globally. They are essentially the most subjected to import pressures, which has resulted in millions of job losses and long-term depression of wages and workers displacement.

Most observers mistakenly believe that the free trade doctrine of bringing all tariffs and non-tariff barriers down was equally achieved among all parties. However, in practice, the low tariff rates set by the US were not conditioned upon reciprocal reductions by trade competitors and therefore have not been reciprocated. This means that most countries are enjoying a larger domestic market share for their goods and asymmetrical market access, at the cost of US businesses and workers. The US should engage in a more strategic tariff-setting strategy that is less idealistic in doctrine and more realistic in its effect on US interests.

The prior administration had placed taxes on EU steel and aluminum in 2018 on the claim that the foreign products produced by American allies were a threat to U.S. national security. However, this strategy did not accomplish all that was desired. Europeans and other allies were outraged by the use of Article 232 to justify the tariffs, leading many to impose counter-tariffs on U.S.-made motorcycles, bourbon, peanut butter, and jeans, among other items. 

The Bureau of Labor Statistics shows that jobs in the manufacturing of primary metals did rise slightly when the tariff increases took place, to as much as 389,100 in 2019. But mills shed workers during the pandemic, and employment in the sector is now roughly half of what it was in 1990.

National security adviser Jake Sullivan, U.S. Trade Representative Katherine Tai, and Commerce Secretary Gina Raimondo announced an agreement. They said that the Article 232 tariffs won’t be removed entirely but that some quantity of European steel and aluminum will be allowed to enter the U.S. without tariffs under the deal.

“We were able to reach an agreement whereby the EU will drop their retaliatory tariffs (on American goods),” Raimondo said. The agreement would ensure “that all steel entering the U.S. via Europe is produced entirely in Europe,” Raimondo added.

Article sourced from CPA and Forutne



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