Many Americans who have not been introduced to the economic underpinnings of free trade (both imports and exports) think trade hurts America. This misunderstanding has been around for decades. The infamous Smoot-Hawley Act was about trade sanctions to “protect” American businesses and jobs. It lengthened and deepened the Great Depression. Protectionism is the opposite of free trade.
In the WSJ article,“Five Myths About Imports”, Laura Baughman lists five misconceptions about imports. Here is a summary:
1.Imports come largely from low wage countries like China.
It is true the China is the largest importer of goods to the US, but about half of our (non-oil) imports come from other high wage countries, like Germany, UK, France, Japan, Italy and Switzerland.
2.Imports cost US jobs.
While some workers lose their jobs to lower cost imports, more workers gain their jobs from them. Imports directly create jobs for transportation and warehousing, and many more jobs indirectly. Baughman’s organization estimates imports create a net increase of about 16 million jobs for Americans.
3.Imports hurt US manufacturing.
More than 60% of imports are raw materials, components, or machinery used to make goods in the US or grow crops locally. These imports help make US firms competitive both locally and globally.
4.Floods of imports hurt the US economy.
Consumers buy more when the economy grows. Imports help consumers and, hence, helps the economy, rather than hurting it.
5.The US is wide open to imports.
The US trade barriers are among the lowest in the world. However, we still impose too many tariffs (taxes on imports) and quotas. Over 1000 products have import tariffs of 10% or higher. These include shoes and other apparel items directly affecting every American consumer. Also, the US imposes import quotas on many products, like sugar, beef, dairy products, ethanol, among many more. Consumers, particularly the middle- and lower-class citizens, are negatively impacted by this capital cronyism.
The Biz Bucks Guy has long used sugar as a training example. For the past several years, Americans pay double the world price of sugar, due to special interest legislation by Congress on behalf of the sugar growers and others in that industry. Not only does this impact every consumer, but jobs are lost. A few years ago, Life Savers were made in Michigan. The company could no longer afford to pay the high US price for sugar. They moved manufacturing to Canada. The boo-birds in Congress called it an un-American strategy. Guess what? Who passed the laws that pushed this company and its jobs out of the US?
Hypocrisy runs amok among the Beltway ruling class.