Would Tariffs on Manufactured Goods help the economy?

We have had a lot of discussion on free trade. There seems to be a lot of opposition to free trade. My own opinion is that Americian manufacturers do not always play smart, and our "trading partners" do not always play fair.

I would like to raise the question: Would tariffs on manufactured goods help or hurt the economy? That is, supposing the US introduced tarriffs that were high enough to keep out many goods made overseas, would the tariffs collected plus the added wages paid in manufacturing be more than the additional cost consumers would have to pay for goods made in the US?

Thermo1

We have had a lot of discussion on free trade. There seems to be a lot of opposition to free trade. My own opinion is that Americian manufacturers do not always play smart, and our "trading partners" do not always play fair.

Click to expand...

It depends which trading partners you are aiming at.... and how snotty EU ministers are eg the last EU-US steel row, where EU steel makers were hit by tariffs because the EU was pumping money into the loss making EU plants..... however this hit the british steel makers harder than anyone as a lot of our steel is made subsidy free in efficent profitable plants(mostly) and exported to where?? yupp the US

However I am in favour of free trade between countries, except where you get unfair competition due to government policies eg China refusing to float their currency springs to mind for some reason.

Boris

Thermo1,

The other thing to consider is the impact of the tariffs our trading partners would add on all of the items the US exports to them and the impact this would have on US businesses. You need to look at the whole system of imports and exports to do a cost benefit analysis.

The US does has some experience with high tariffs, most famously, the Smoot-Hawley act which was signed into law in 1930 and raised tariffs on over 20,000 items and is believed by many to have deepened and extended the Great Depression. Some even argue that knowledge that the act was going to pass helped to precipitate the stock market crash in October 1929. A brief discussion of Smoot Hawley is here: http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff

Put it in simplier terms.
If your town put a 10% sales tax on cars,
would you be as free to buy a car in your town.
I doubt it

Another simplier way of looking at it.
Our IRS started as a simple tax on wages.
It is now over 100,000 pages long.
No one understands all of it
It is a nightmare to fulfill
And still people can work around the system.

Taxes and Tariffs led to cheating,fraud and impede the flow of commerce
Commerce is what raises the standard of living.
Don't believe that?
Then name one country and only one that ever improved their standard of living and stayed isolated....
rich

The War of Northern Aggression (known to some as the unCivil War) was all about tariffs. It was only after the shooting started, and for popular consumption before then that it was about slavery. Read Lincoln..."slave or free, doesn't matter, preserve the union", "Emancipation Proclamation" specifically excluded those states which were still part of the union, where Lincoln had undisputed authority to make and maybe enforce such a proclamation. Only after the war, with Constitutional amendments, were those slaves freed.

Bottom line:

The South wanted to sell cotton to England, where they could get higher prices and buy English manufactured goods, which were lower priced than equivalent items made in the North. Lincoln was a big business President who could not let that happen, and so ever higher tariff's were passed. When the South said "that's enough, we're out of her" Lincoln said "NO" and over 600,000 American casualties were the result.

The North won, and those industrialists became multinationals and want NO tariff's, so what do we have? NAFTA and "Most Favored Nation" trading status for China.

Charles

The Constitution gives Congress the power to enact tariffs. It is our government's responsibility to do so in order to protect domestic industries. It is not only a matter of economics but it is of strategic importance.

All nations enact tarrifs of some kind or another. All nations are protectionist to some degree or another. Any idea that the USA can act as a free trade patsy while other nations do not is foolish.

The Civil War was just that, a nasty conflict within our nation. It's root causes were economic but I beleve that European powers, especially England would have prifited immensly from the break up of the Union. The Confederacy was financed from Europe, confederate money was backed by a Swiss bank.

If the South won the war, they would have been bankrupt. When the Eurpoeans collected on their debt, the South would end up as a European, most likely British, colony.

From the last quater of the 19th century to the 1980's, the USA was the world's major heavy manufacturing nation. Most of the large American manufacturing corporations were multi nationals almost from their beginnings. No other nation had the capacity to invent and then deliver in quantity the way that the USA could.

The USA could tarrif with impunity and to a certain extent we did. I do not believe that Smoot Hawley percipitated The Great Depression. There was too much other foolishness going on at the time to blame one act of congress.

The present problems started when American manufacturers lost their loyalty to their workers and to their country. The idea of setting up facotries abroad in cheap labor countries and then pushing for reductions in import duties is the thing that led to the gutting of the country's manufacturing capacity.

Yes, this is simplistic, but it is quite true. Our leaders have fallen for the line that the USA can be in charge of management and information without regard to keeping it's heavy manufacturing base.

As the USA looses it's manufacturing the whole country approaches the condition of the South just before the civil war. We export minerals and agricultural goods and import manufactures.

It won't be too long before the USA becomes a colony. Instead of being subjugated by a nation, our masters will be a loosly knit conglomeration of the heads of multi national corporations.

Sadly, the same masters will rule the nations that are doing the manufacturing also.

Not even Napoleon could come up with a scheme like that. World Conguest 1, 2, 3.

Better than a tarriff, make the importers pay a recycling fee for the goods they ship here!
When I get my car serviced I'm charged a recycling fee on batteries and tires. The importers get away scott-free!
Our land fills are busting at the seems with imported goods. We have acre upon acre of old imported tires laying a round and most electronics now come with Chinese batteries included.
The importers turn our raw materials into profits, dump that stuff in our laps then smuggly go to the bank. We, meanwhile, are saddled with the expense and responsibility of the disposing of that stuff.
I would never make it at Prez as I would stick it right back to 'em!

Instead of a tarrif on mfr'd goods, didn't
some wise person suggest an offset, instead?

The idea is, before china can ship us a million
dollars worth of cars, they have to buy a
million dollars worth of locomotives first.

Etc.

Jim

This is going on right NOW... will it help or hurt us? I dont know....
Who will it help?
Who will it hurt?


Silly tariffs crimp the hose

May. 22, 2006 12:00 AM
http://www.azcentral.com/arizonarepublic/opinions/articles/0522mon2-22.html


Maybe one day ethanol - as a fuel additive, or even as a replacement to fossil fuels - will save us from the vagaries of Big Oil.

Many of the participants at the recent Clean Cities Congress and Expo in downtown Phoenix certainly hope so. Plenty of ethanol-fueled engines were on display at the alternative-fuel and advanced-vehicle technology event.

Ethanol is something to hope for, certainly. In the real world of $3 per gallon gas, however, ethanol - or, more precisely, ethanol politics - is a major contributor to our wallet woes.

In the United States, ethanol is mostly a byproduct of corn. And largely in pursuit of a U.S. energy policy that seeks to double the consumption of ethanol fuel additives to nearly 8 billion gallons per year by 2012, the federal government subsidizes the bejeebers out of corn.

Between 1995 and 2004, U.S. taxpayers paid $41.9 billion to U.S. corn farmers, according to the farm-subsidy database of the Environmental Working Group.

That's just one side of the artificially inflated cost of ethanol to consumers. It gets much worse.

Since a massive subsidy to U.S. agribusiness ($4.5 billion in 2004 alone) apparently isn't enough to keep the ethanol industry competitive, the United States assesses a 2.5 percent tariff on imported ethanol, as well as a 54 cents per gallon second duty.

Between congressional mandates for ethanol use in fuel and an artificially strangled supply of the product, prices for ethanol are soaring. And as Arizona's Sen. Jon Kyl and Rep. John Shadegg have observed, that combination has contributed mightily to the soaring cost of fuel at the pump.

Kyl, along with Sen. Dianne Feinstein, D-Calif., has introduced legislation to permanently reduce the absurdly high 54 cents per gallon tariff on imported ethanol. Shadegg has introduced similar legislation in the House.

The proposals are especially important to Arizona, where ethanol must be hauled by trucks and added into seasonally required fuel mixtures. It is a costly, cumbersome system that adds significantly to what drivers here must pay at the pump.

It is the height of absurdity that the tariffs are levied in the first place.

If Congress is serious about driving down the pump price of fuel, a first (and ridiculously easy) first step would be to stop artificially crimping the market of a fuel additive that Congress demands we use.

Thermo,

Today it's pretty tough to impose tarrifs - WTO.

I also recall something called "Smoot Hawley". Didn't help our economy one little bit.


I think what would help our economy is the following...

1. Rationalization of Environmental Regulation. Any regulation would be based upon scientic method, not junk science, not fad science. We'd have to scrap the "10 Micron" particulate non-sense, which even EPA scientists questioned.

Any regulation would give business the benefit of the doubt. No more Class Warfare.

Eliminate the power of organizations like the Sierra Club and Greenpeace to sue the Government in order to inflict regulation.

In a like vein, eliminate "reasonable person" clauses in all regulations. These are just job security for Trial Attornies.


2. Flat Tax - Encourage competition. Encourage people to keep what they make. Encourage the lazy to get off of their butts and get to work, or work harder.

3. Eliminate "civil forfeiture". Restrict Eminent Domain to cases where the public would benefit, and not private concerns who MIGHT earn more tax money. Private Property is the foundation of our prosperity.


I think these measures would do a lot more for our economy than tarrifs.

Gene

Smoot-Hawley has more lives than a cat. I've posted this once or twice before but this topic won't go away so here it is again:

If I have to pay thousands of dollars in property taxes to support a school system, I want that school system to prepare our students to survive in our world. I don't want these kids coming out of public schools brain-washed in "free trade" dogma.

Do I exagerate?

In high school, I was taught U.S. history from a text, "Rise of the American Nation" by Lewis Paul Todd and Merle Curti. I have a copy of it.

On page 729 the text describes the Trade Agreement Act of 1934, which invented "most- favored nation" status and gave the President authority to raise or lower tariffs by as much as 50%.

The text states:

"It gave the Roosevelt administration an effective instrument for stimulating American business by improving trade relations with other nations of the world."

One itsy-bitsy, tiny little fact was left out.

The United States Constitution.

Article I, Section 8, Clause 3:

"The Congress shall have power..To regulate commerce with foreign nations.."

Nowhere in the entire Constitutional Convention, did any framer of that document ever intend for one branch of government to abdicate it's authority over to another branch.

We graduate millions of public students who are ignorant as to how the U.S. Constitution is violated every single day because of liberal history "professors" who write propaganda and pass it off as history. They, in turn, indoctrinate our public school teachers in the "new speak" of "globalism". The teachers, brain-washed in our Universities, proceed to brain-wash our children.

This text with an original copyright of 1950, was still used in 1979 when I graduated, almost unchanged.

On page 651, the text describes the Hawley-Smoot tariff bill of 1930:

"The President felt that some of the rates were too high. He also pondered a petition signed by 1000 leading economist who argued that such high tariffs would raise prices, create hardships for American consumers, seriously interfere with world trade, and invite economic reprisals from other countries."

On page 653, the text is "explaining" some of the possible causes of the great depression:

"Other economists argued that America's high tariff policies helped to stifle world trade and hurt American business. High tariffs, they claimed, prevented other countries from selling their goods in the United States. This in turn prevented them from securing the dollars that they needed to buy American products."

This very same argument showed up in the NAFTA debate between Ross Perot and V.P. Al Gore in 1993.

Any idiot who can stumble into any library, pick up an almanac and read it, will find the following information:

1930 U.S. GDP = $91.3 billion

1930 imports = $4.1 billion

Now if Todd and Curti could perform percentage calculations, they would discover that imports were 4.1 / 91.3 x 100% = 4.4% of GDP in 1930.

With a little research, you find Hawley-Smoot applied to only 1/3 of all imports. In 1933, Hawley-Smoot had the longest list of duty-free imports in American history.

Todd and Curti on page 651 states:

"The Hawley-Smoot tariff bill, calling for the highest tariff in American history..."

Hawley-Smoot average tariff 1930 = 53%, 1932 = 59%

Tariff of Abominations 1828 = 62% applied to 92% of all imports

Morrill tariff applied to 96% of all imports

McKinley tariff applied to 48% of all imports


Hawley-Smoot applying 33% of 4.4% of GDP ? .33 x 4.4 = 1.5% of America's GDP in 1930.

A 53-59% tariff on 1.5% of America's economy caused the great depression that created 23.6% unemployment in 1932 ??????

So this work of fiction passing itself off as a "history text book"
somehow missed another small research resource when trying to "discover" the cause of the Great depression. What would that be?

The Congressional Record.

At the Silver Hearings held by the Senate Finance Committee in 1939, Senator Robert L. Owen, Chairman of the Senate Finance Committee said:

"When President Roosevelt came into power six years ago the outstanding currency on March 15, 1933 was $7.2 billion; then it was contracted by the Federal Reserve Board and only expanded by the purchase of silver certificates as to now reach the maximum of $6.7 billion. During the first year of Roosevelt's administration the Federal Reserve Board contracted the currency by two billion dollars. At present the outstanding credits of the Federal Reserve System are a billion dollars less than they were when Roosevelt came in. Under the influence and direction of the Federal Reserve System 16,000 banks have failed in 16 years through mismanagement of the System. The loss in production in the last ten years reached $200 billion in products and services which might have been enjoyed by the people under a management which had their interests at heart, and the country would be free of debt and heavy interest charges. These facts are proven records of the Federal Reserve Board of Governors. I make no charges against them on which they do not stand self-convicted by their own speeches and publications. The Fedral Reserve System with its enormous power, with its large bureau of research, with every opportunity to know the facts and take action to help us, has not given this country any relief, and has done all it could to worsen the situation. The consistent action of the Board has been to set itself up firmly as an obstacle to the regulation of the value of money by Congress. The manner in which the stability of our economic life has been impaired by the mismanagement of the Federal Reserve System, and the remedies therefor, have been clearly set forth in Senate Document 23 of the 76th Congress, 1st session. The members of the Board of Governors should not be bankers. The Board and the big bankers have the power to immediately end this depression by instructing the Reserve Banks by instructing the Reserve Banks to buy bonds and notes of the United States on account of the United States at the rate of $50 million a day until such non-liquid securities converted into liquid money should correct the deficit of liquid money produced by the hoarding of demand deposits."

Again, assuming Todd and Curti can read and do percentages, and that Senator Owen knew anything about what the Federal Reserve was doing (ever hear of the Glass-Owen Amendment ?) $2 billion contraction of a $7.2 billion supply of money is

2 / 7.2 x 100% = 27.8 % contraction of the currency in circulation.

Gee, wonder what would happen today if you contracted the currency supply by 27.8% ?


On May 23, 1933, Congressman, Louis T. McFadden, brought formal charges against the Board of Governors of the Federal Reserve Bank system, The Comptroller of the Currency and the Secretary of United States Treasury for numerous criminal acts, including but not limited to, CONSPIRACY, FRAUD, UNLAWFUL CONVERSION, AND TREASON.
The petition for Articles of Impeachment was thereafter referred to the Judiciary Committee and has
YET TO BE ACTED ON.

"THE GREAT DEPRESSION

"Meanwhile and on account of it, we ourselves are in the midst of the greatest depression we have ever known. From the Atlantic to the Pacific, our Country has been ravaged and laid waste by the evil practices of the Fed and the interests which control them. At no time in our history, has the general welfare of the people been at a lower level or the minds of the people so full of despair.

"Recently in one of our States, 60,000 dwelling houses and farms were brought under the hammer in a single day. 71,000 houses and farms in Oakland County, Michigan, were sold and their erstwhile owners dispossessed. The people who have thus been driven out are the wastage of the Fed. They are the victims of the Fed. Their children are the new slaves of the auction blocks in the revival of the institution of human slavery. "

Congressman Louis T. McFadden
the entire text may be found in the Congressional Record, pages 12595-12603


Tariffs are a TAX, you pay them, I pay them, so why shouldn't imports pay them? If they don't pay them, take a big, fat, guess who gets to pay them?

That's right, you and I pay them, because, bright people, unless government spending isn't reduced as the tariffs are reduced, the Feds have to get their revenue from somebody.

And that somebody is you and me.


Steve

GeneH-

I think these measures would do a lot more for our economy than tarrifs.

Click to expand...

You keep on thinking and I'll keep throwing facts to you:

The ultimate unfair tax - the one that has been destroying our manufacturing - is the tax that was shifted from imports to the domestic producer.

As of Fiscal Year 2005, from the OMB come these numbers:

U.S. Gross Domestic Product = $12,479.9 billion
Imports = $2,024.9 billion
Total U.S. Receipts = $2,153.9 billion
U.S. Receipts from Duties = $23.4 billion

Imports as percent of GDP = 16.2 %
Taxes paid on imports as percent of total receipts = 1.0%

Duties paid as percent of imports = 1.1%
U.S. Defense budget = $420.7 billion
U.S. Population = 295 million
per capita defense spending = $1,426

China's per capita income for 2005 = 9,400 yuan
9,400*0.124042 U.S. dollars= $1,166.00 dollars

The average Chinese worker earns 21% less than what the average American has to pay out for military spending.


What a deal. How would you like to hang the tax burden of the largest military on the planet, a burden that exceeds the next 24 countries combined, around the neck of the American worker and get full ripping market access and only pay 1% taxes?

Want a simple demonstration of the result?

Take a look at NAFTA.

Take a look at our balance of trade with Mexico before NAFTA and then after and then tell me tariffs don't work.

If tariffs didn't work, these stinking trade agreements wouldn't bother with them, but of course, they do work and these trade agreements MUST eliminate them to achieve the desired result.

Destroying America.

Steve

"Any regulation would give business the benefit of the doubt."

We have those already. They reward corporations
for sending their manufacturing overseas, and
allow them to shelter their profits from US
tax in offshore accounts.

We've *got* that and it seems this is part
of the problem, not part of the fix.

And Gene, you still haven't taken my comment
to heart about 'making folks work harder and
getting rid of deadbeats.' In present
govenment circles, this means get rid of the
number one entitlement program, social security.

Is that what you *really* want?? If you keep
asking for it you might get it.

Jim

Excellent series of post guys!!!

Great points.

I'd like to make a point and that is...as near as I can tell, we the voters still have control over our country.

Things are fouled up because we are slowly losing control...like Jim Rosen's Social Security comments which is sucking America dry via a band-aid that's become a Queen Mary sized cancer;
Machinehead61's point about trade and tariff's serving to bring down America;
Additionally, Machinhead61's point about penalizing others is really a tax on US and excessive taxation is an extreme burden on us;
and Geneh's 3 points which is essentially less government.

We voters need to say no more and elect people who restrict our government to that contained in the Constitution.

Government does not help it's people by giving. They must first take before they can give.
We must force government to follow the Constitution and "Help" us by getting government itself out of our way.

I'm not sure which side you are on social security, Jim...but I like the idea of releasing all those it's obligations that want to. WE Should simply take care of ourselves.

Also...welfare was not in our vernacular 40-50 year ago and now we pay a tax so people can sneak across the border and have babies and terrific medical care and take our jobs.

Our job ....by the way ....is to stay informed and vote for less government.

Remember, I'm really on *Gene's* side with
SS.

It's an entitement program, but it's a good one
and we should keep it, perhaps with a few
changes. Our society has decided, collectively,
that we should look after the elderly.

Jim

If the South won the war, they would have been bankrupt. When the Eurpoeans collected on their debt, the South would end up as a European, most likely British, colony.

Click to expand...

Instead, it became a colony of the North. Suddenly taxes were due payable in currency that existed only in the North. Anything valuable was snapped up by carpetbaggers with cash made on the war. Not much has changed.

Don't get me wrong, I see it that the South's leadership was so incredibly AWFUL that they started the war. Firing on Fort Sumter only gave an excuse for the North to mobilize. The South had left the union already. Why fight at that point? Stupid. My family was wealthy before all that. My great grandfather ended up a badly wounded and crippled Confederate veteran with nothing. War is only good for those with money to make off it.

I really wonder what good stiff tarriffs would do at this point. Looks like the industries aren't there to protect.

Richard

If the South won the war, they would have been bankrupt. When the Eurpoeans collected on their debt, the South would end up as a European, most likely British, colony.

Click to expand...

If it had ended up as a British colony, then its ability to produce cheap cotton would have been lost since slavery had been abolished in Britain and its colonies in 1824

Unfortunatly the US civil war was so long ago, that is it really worth dragging out the unfairness and the bitterness it caused.

Boris

The British Colony thing is ludicrous. If Britain had such a large stake in the outcome, it would have joined forces with the Confederacy.

I guess one day the V-2's will have been far back enough in England's past that they won't really be worth mentioning either, huh?

Yes, it's worth bringing out the facts about what happened. Learn from it. I really doubt Jim's people were even here when the war occurred. He knows not a damned thing about the South, and probably never will.

Back to the tarriffs. What industry are we trying to bring back with them? What will the money fund? What products will they pertain to? Why would those doing well the way it is now go for that?

"It is difficult to get a man to understand something when his salary
depends upon his not understanding it." -- Upton Sinclair

Click to expand...

Richard

Richard Rogers-

What industry are we trying to bring back with them?

Click to expand...

Manufacturing.

What will the money fund?

Click to expand...

Go towards the Federal government's budget.

What products will they pertain to?

Click to expand...

All imported goods.

Why would those doing well the way it is now go for that?

Click to expand...

They won't. They were the ones who wanted it in the first place and lied through their teeth about the "benefits" that never happened. Go ask the average Joe on the street if "free trade" has helped bring factories to their town.


Steve

MH,

While I admire your tenacity, I still see that it's largely late in the game for much of it to work. Once a whole industry is gone, who will be willing to take the risk the Republicans will stay out of power long enough that their plant will stay protected by tarriffs for any appreciable time? (Yeah, yeah, bash the Democrats in rebuttal to the Republican comment. I'm not a "demopublican," just calling a spade a spade. I still never saw anything quite like this Republican love affair with multinationals)

For what it's worth, you got every question largly right (in my view). You win, but you don't get nuttin.

Richard