The Custom-House

"When tariff policy is laid out in this way, it looks literally insane."

Tim Taylor, the Conversible Economist, describes the impact of the 2009 tariff on tires from China:

When tariff policy is laid out in this way, it looks literally insane. No one would ever advocate a policy of imposing a tax worth $1.1 billion on all U.S. purchasers of tires, with $48 million to go to actual workers who produce tires, $250 million to go to U.S tire companies, and $800 million of the revenue from that tax to go to foreign tire producers.

Based on a recent Policy Brief by Gary Clyde Hufbauer and Sean Lowry of the Peterson Institute: US Tire Tariffs: Saving Few Jobs at High Cost.

 

 

Worthwhile Congressional Initiatives

The Progressive Policy Institute points out that: The United States Collects More Tariff Money from Cambodia than from Britain (Trade Fact of the Week, February 20):

Some of our highest tariff rates are imposed on goods from some of the poorer countries.  "...countries which make cheap and simple clothes, shoes, and luggage face a far more restrictive American trade regime than the rest of the world."  So we end up taxing goods from less developed Cambodia an average 17% of their value, while goods from the affluent U.K. are only taxed 0.7% of their value.

Here are some congressmen and women who want to do something to adjust the tariffs on goods from some poorer countries:

• Rep. Jim McDermott seeks to exempt Cambodia, Bangladesh, Afghanistan, and other least-developed countries not covered by tariff exemptions like the African Growth and Opportunity Act: http://www.house.gov/mcdermott/pr071018.shtml
• In the Affordable Footwear Initiative, Reps. Joe Crowley (D-NY), Kevin Brady (R-TX), and Nancy Boyda (D-KS) seek to scrap tariffs on low-priced sneakers and shoes not made in the United States. National Public Radio reports: http://www.npr.org/templates/story/story.php?storyId=10991519

U.S. tariffs are regressive - since they tend to be highest on "cheap and simple consumer goods" the poor in the U.S. end up paying a larger proportion of their income than the rich.  They're regressive, and not much of a job-preserver:

...the tariff system today is more often defended as a job-protector. But employment in high-tariff industries is declining rather than growing. The International Trade Commission's 2007 computer-model analysis, Economic Effects of Significant Import Restraints, suggests that the system protects almost no jobs. Simply scrapping it, along with farm quota programs, would shift 60,000 jobs over five years -- not even half the routine 140,000 jobs that turn over every day in the United States. Structural forces cutting the costs of goods and services trade -- larger and faster container ships, better ports, air cargo, the Internet and global telecommunications generally -- seem to be amplifying the power of comparative advantage so strongly as to make the system ineffective. The ITC explains:http://hotdocs.usitc.gov/docs/pubs/332/pub3906.pdf

As I recall, the same ITC report also indicated that the overall welfare impact of eliminating the remaining U.S. tariffs would be pretty small.

Progress

The weary old world makes progress, maybe slowly.  Case in point: U.S. tariffs on magic tricks and practical joke articles have fallen from 70% in 1930, to zero today. 

The Progressive Policy Institute (PPI) reports in its "Trade Fact of the Week": "Tariffs on Cars Are 2.5 Percent, But on Pickup Trucks 25 Percent"

Seventy years later, almost all American tariffs are lower than the ones Roosevelt inherited. The Hoover-era tariff on karate uniforms, for example, was 90 percent and the modern karate-uniform tariff is 9 percent. Tariffs on crabmeat have also fallen (though not as steeply) from 15 percent to 7.5 percent. Other examples: beach umbrella tariffs are down from 60 percent to 12 percent; howitzers and grenade launchers, from 27.5 percent to zero; Mother's Day roses, from 40 percent to 7.5 percent (and zero if they are from Colombia, Ecuador, Kenya, or other flower-growing beneficiaries of special duty-free programs); on helicopters from 30 percent to nothing; and on joy buzzers, exploding cigars, marked cards, and other "magic tricks and practical joke articles" from 70 percent to zero.

This PPI product looks interesting as well:

PPI explains America's odd tariff system, how it works, and why it is toughest on single mothers and least-developed countries in Asia: http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=108 &subsecid=900010&contentid=253112