 Bush administration: 8-30% tariffs on steel - strength of free trade?

 Tariff policy as boring and out of date, system is not amiable for people
 The victims of tariffs are the poor
Problem
 Neglect in tariff policy, apathy  only seen as supporting role, leverage
 For years have satisfied the interest of the economic players bu
 Average tariff rate is extremely low(industrial imports tariffs)
 Two tariff systems: 1) for low-tech consumer goods 2) everything else
Shoe fits?
 Tariffs are high on consumer goods and low on overall
 Why? To keep jobs in light manufacturing – human capital
 But, in the U.S., employment in high tariff industries only accounts for 3 percent
Getting a sweater for this holiday season will never be the same this holiday season. What of the
economy. Economic development is a double-edged sword. U.S. has a long history of economic
policies that aims to protect its nationals while also flourishing diplomacy and helping other
nations by trading with them. Trading with U.S. will allegedly create jobs, reduce cost of basic
clothing imports, and rewards institutional reforms for poor nations. However, the cost of this
‘protection’ is carried by the American consumers –specifically the poor population. Poor
consumers are in the front line who will take the blow from the impact of international trade. The
garment trade in this case is a critical example. Take the garment trade industry in the U.S. for
example. Gresser addresses that the poor consumers are hit the hardest by higher cost low end
clothing especially single parent families.

Problems
- U.S. tariff policy has evolved to be tougher on the poor both at home and abroad
- Higher burden on the low-income households who spend more on traded goods
o Specific family structure: single parent families – has disproportionate impact on
single parents and women
- Taxes do not uniformly fall on all goods especially on consumer goods: Regressive tax
manner
- Tariffs have arbitrary and unintended consequences for consumers that protects a little
sector of the economy
- Tax policies are underexplored and leaves an undesirable effects to the society that needs to
be taken time to research on
- Shoes industry fell in US leading to falling employment rate in high-tariff industries
- ““Tax analysts know very well that any tax on home goods will be regressive. This is
because wealthy families spend the smallest share of their income on home goods, while
low-income families — especially if they have children — spend the most,”
Why do they exist?
- Tax policies are underexplored
- 2/3 of US import duties are collected o home goods such as clothes, shoes, towels,
pillowcases, luggage, handbags, silverware, plates, and drinking glasses
Solution?
- Comprehensive world trade agreement- economic diplomacy
- Considering lowering or even eliminate tariffs on all home goods not made in the us
OK, SUN REONG BS FOREIGN AFFAIRS – II CASE ANALYSIS FOR INTERNATIONAL TRADE
Since the end of world war, the world economy has paved its way to a liberalist approach in the trade
industry. Although US has a long economic history of openness to trade and investment, the country
maintains duties on several types of goods. However, the degree of policies that are implemented in
trade failed to meet up to its objectives of protecting the welfare of the people. This leaves an
undesirable effect to the society especially on the poor sector. That is why policy makers should take
into account of the significance of domestic affairs especially on the impacts towards low-income
sectors of the working class as a result of external activities and measures. Additionally, they also
need to develop means of protection that wouldn’t cost the welfare of the citizens.
According to Edward Gresser, low-income households who mostly spend on traded goods have a
higher burden due to the mark-ups and tariffs that are added in the final pricing of goods. Tariffs do
not fall uniformly on all goods which shows a regressive characteristic of the US taxation system. This
flaw seems to be ignored as this doesn’t directly affect the upper-class population. However, in the
long run, the overall economy will lead to the dissatisfaction of the working class and will definitely
hit the upper-class before they know it. The effects of the tariff system in the long run will be declining
GDP, wages, and employment rate. Additionally, a conservative tax code will prevail if tariff burden
continues to increase.
The ongoing US-China trade war is an imminent issue of how tariffs affects the citizens of US. A study
by the Council of Economic Advisers shows that the high tariffs imposed by Trump will place a
heavier burden on the poorer people, especially on working-class families and single parents. Several
studies also show that that tariffs reduce the availability of goods and services that leads to lower
economic output. Thus, the employment structure will be damaged and would cause a recession
Sherman Robinson, nonresident senior fellow at the Peterson Institute for International Economics,
assures.
Several studies actually quantified that the cost of tariffs often fails to achieve its goals. It was found
that during the administration of George W. Bush, when the steel tariffs were implemented, that more
American workers have gone unemployed by the steel industry. The outcome of protectionist policies
implies that it may protect domestic industries in the short-term but it fails to help the intended
beneficiaries.
A comprehensive world trade agreement and economic diplomacy must be practiced by the US.
Although Gresser makes a point on the declining welfare of working class due to tariff policies,
removing it entirely will do no good to the US economy. Rather than erecting the barriers from
imports, promoting free trade and economic diplomacy will bring better economic environment for
the low-income population countries. Creating and dividing opportunities through international
economic institutions can allow countries to go hand-in-hand in developing international economic
development.
Additionally, a comprehensive understanding and research should be done in this underdeveloped
field to discover new set of policies that can be flexible enough to the changing world. The US and
other countries that practices extreme protectionism must research in depth different solutions and
alternatives on to how to protect and develop their domestic economy without great cost to a specific
population.
Economics I believe, is always a double-edged sword. There will always be victims in a system but if
there is a method that can alleviate the situation in comparison to a traditional method, it should be
a priority for the government to choose measures that puts less negative impact on the welfare of the
people . Most importantly, personal political differences should not be in the way of the decision-
making of the entirety of the population.