IT'S RACISM, NOT ECONOMICS:

Supporters claim that tariffs will create more jobs and higher incomes in the U.S. by substituting American-made products for foreign products. This claim is, at best, disingenuous and, at worst, simply wrong. To be sure, tariffs on softwood lumber imports from Canada will likely create more employment in sawmills in the Pacific Northwest. However, it will also lead to higher costs for builders of new homes and renovators of existing homes. This will result in overall less employment of construction workers and those working in activities related to home construction, including mortgage brokers, title insurers, and architects. This does not create more employment. At best, it simply changes the mix of employment.

Since Boeing is not currently producing a direct substitute for Bombardier's C-Series plane, it is not even clear that the tariff proposed against Bombardier will lead to increased employment at Boeing. A tariff will certainly not encourage Boeing to improve its efficiency. However, if the proposed tariffs against Bombardier are finalized, they will almost certainly force Delta and other U.S. airlines to use planes that are less efficient for their businesses. This, in turn, suggests that U.S. airlines will pay lower wages to their employees than they otherwise would or raise prices to their customers. Either way, this will result in lower real incomes for Americans who work in the airline industry or consume its services.

When imposing countervailing and anti-dumping duties, U.S. trade authorities often focus on the effects imports have on specific domestic industries and thus the narrow economic interests of particular companies and their employees. Trade administrators should instead adopt a broader social benefit-cost perspective, as they are supposed to do when negotiating trade agreements. Very few actions to raise the price of specific imports would pass a test for positive net social benefits. 

Tweet   @brothersjudd