Tar­iffs and trade-offs

The Aurora (Labrador City) - - Editorial -

For a White House that has re­cently taken to jus­ti­fy­ing its ac­tions with quotes from the Bi­ble, here’s some­thing to think about: “As ye sow, so shall ye reap.” (It’s Gala­tians 6:7.) There’s been a lot of fo­cus on the effects that new Amer­i­can tar­iffs will have on Cana­dian busi­ness. But in the U.S., con­sumers and farms are wak­ing up to the fact that they may also be col­lat­eral dam­age in a trade war started by their own pres­i­dent.

Take wash­ing ma­chines as a sim­ple ex­am­ple of the risks of trade tar­iffs: U.S. Pres­i­dent Don­ald Trump brought in new tar­iffs on for­eign­made wash­ing ma­chines in Jan­uary, the idea be­ing that the move would pro­tect U.S. pro­duc­ers. In May, the price of wash­ing ma­chines across the en­tire United States jumped by 17 per cent — the largest in­crease in his­tory for a mar­ket that buys 10 mil­lion wash­ers a year. Not only that, but new tar­iffs on steel and alu­minum are likely to drive the price even higher; buy­ing steel in the U.S. cur­rently means pay­ing 50 per cent more than buy­ing steel in Europe or China.

The cost of pro­tec­tion­ism in that in­dus­try alone is likely to be tens of mil­lions of dol­lars — all paid by U.S. cus­tomers. Mean­while, a U.S. eco­nomic con­sult­ing firm is warn­ing that, for ev­ery job that steel and alu­minum tar­iffs pro­tect in the U.S., 16 jobs will be lost. Trade Part­ner­ship World­wide LLC is pre­dict­ing that the in­creased costs to con­sumers in the U.S. will rip­ple through the econ­omy; the firm is an­tic­i­pat­ing 400,000 U.S. job losses, in­clud­ing 375,000 in the ser­vice in­dus­try.

Then, there are the im­pacts on farm­ers.

Just look, for a mo­ment, at the con­cerns in Ohio.

Ohio agri­cul­ture is deeply in­vested in the Chi­nese mar­ket, par­tic­u­larly for soy­bean sales. In all, 31 per cent of that state’s soy­beans go into the Chi­nese mar­ket — and China has pro­posed a 25 per cent tar­iff on Amer­i­can soy­beans in re­tal­i­a­tion for pro­posed U.S. tar­iffs. This week­end, Ohio State univer­sity crunched the num­bers and pre­dicted that the av­er­age Ohio farmer would see their in­come drop from US$63,577 to US$26,107 as a re­sult of the tar­iffs.

In to­tal, the drop in soy­bean ex­ports for the state to China would fall by US$241 mil­lion ev­ery year. Na­tion-wide, soy­beans are a US$12 bil­lion in­dus­try.

Ohio was a key state for Trump in in the 2016 pres­i­den­tial elec­tion. In Akron in Au­gust 2016, Trump said his ap­proach would ac­tu­ally mean the op­po­site of what seems to be oc­cur­ring:

“My trade re­forms will raise wages, grow jobs and add tril­lions in new wealth into our coun­try.” There would be, he said, “so much win­ning.” Right now, the win­ning looks like it could be out­stripped by the los­ing — and in states that were cru­cial parts of Trump’s vic­tory.

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