Headhoncho, to be honest, if the US government and the thinktanks can’t even make head or tail the figures, us lesser mortals don’t have much chance. I think the reason people think their economies need to be ‘protected’ is because there’s already such an almighty mess of trade controls, tariffs and subsidies that it’s impossible to predict what will happen to that bit over there if someone pulls this bit of string over here. If there were a lot less government interference in the first place, it would be much clearer that to see that tariffs are simply harmful.
If you don’t believe this is the case, can you give a concrete example of (a) one particular area where you think an import tariff should be imposed and (b) why you think that would benefit America in general? It is not enough to demonstrate benefit to one specific industry.[/quote]
I think that tariffs are just one form of favouring the local industry, they are one weapon in the battle of getting favourable trading conditions for your own country in the global trading market. The biggest problem I have with being ‘anti-tariff’ is that it removes a weapon that can be used in negotiation.
It’s like going to war and both sides were evenly matched but one side said no matter what happens we are not going to use air-craft carriers because that goes against our principle that the oceans should be open areas free of military interference, it just immediately puts you at a strategic disadvantage. You have told the other side in advance where your weakness is and they are going to exploit that to the fullest.
As for where to apply tariffs (taking the US as an example), my idea is a general tariff on imported goods and services of 5-10%, this will generate badly needed revenue for the US government and help to push manufacturers and service operators to have physical locations in the US. In this way the tariff is seens as fairly spread across all industries. If other countries weren’t willing to adjust their terms of trade such as currency rates or unfair favouring of domestic companies I would pull the trigger and let them know it, you’ve got to ready to back up your threats or people don’t take you seriously.
Being forced to choose some areas to apply a tariff furniture or vehicle manufacturing or vehicle parts or semiconductor industry might all benefit in the US from increased tariffs given the size of the home market compared to their current or potential export market. I would definitely apply a tariff on partially and fully assembled electronic goods entering US, many other countries use a similar approach. I would also apply a tariff on touch-screens and LED screens too to encourage an integrated supply chain to set-up in the US.
Look at what Brazil is doing- http://finance.yahoo.com/news/Taiwans-Hon-Hai-assessing-apf-2875580144.html?x=0&.v=1 , supposedly looking at 12 billion in investment in 5 years!
Just to reinstate where tariffs benefit America in general, they generate badly needed revenue for the government to balance its budget, they favour investment and job creation (if done in the right way) thereby reducing demand on social services, giving job and income opportunities and again generating tax revenue for the government. By encouraging purchase of local manufactured goods they reduce the trade deficit and amount of debt controlled by overseas countries and reduce the leverage of foreign countries who the US depends on to prop up the dollar and government services through borrowing.
Employment and compensation were both criteria used in the brief, and both increased more in the 13 year period post-NAFTA than the 13-year period pre-NAFTA.