Toward a More Perfect Union: A Prescriptive Approach — Trade & Tariffs
Trade and Tariffs
There is no one-size-fits-all approach to issues of international trade. There are, however, reasonable compromises. The North American Free Trade Agreement (NAFTA) that took effect in 1994 exemplifies such a compromise. It eliminated duties on goods being sent to Canada and Mexico while doing the same for goods coming into the U.S. from those nations. This meant that some of our industries – like certain manufactured goods – faced stiffer competition from foreign imports, but it also meant that other industries – notably agriculture – were able to expand their markets. The end result was mixed, but it did provide for an easier and less problematic trade path between the nations involved, a process that enhanced the overall economy of the participants.
The protectionist element in our society would like to close the openness and rescind NAFTA in the mistaken belief that limiting the sale of manufactured goods to those made in the U.S. would be beneficial to our economy. First, our nation has no monopoly on the best and most economical manufacturing processes. Second, without competition from other markets, the cost of goods would increase. Third, without those foreign markets purchasing our goods and agricultural products, our economy would be weaker.
We need only look back to the Smoot-Hawley Tariff of 1930, which imposed significant tariffs on over 20,000 imported goods. This law, passed in the depths of our Great Depression, served only to make things worse. Imported goods cost more while people were more impoverished. Though economists are unsure of the extent of the damage, they generally agree that the passage of the Smoot–Hawley Tariff exacerbated the Great Depression. This protectionist ploy did nothing but harm. In the intervening years, even our conservatives have grown skeptical of the benefits of tariffs.
Another attempt at compromise is the Trans-Pacific Partnership (TPP) which President Obama championed as a way to provide a counterbalance to the growing economic influence of China in the Pacific region. Signatories to the TPP include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States. After his inauguration, Trump withdrew the U.S. from TPP. This significantly weakens the TPP and our ability to negotiate from strength when dealing with China. The rationale for joining the partnership is that our nation has to make some concessions to its partners in the pursuit of equity. Some industries suffer while others benefit, just like in NAFTA.
Despite its disadvantages, TPP has significant advantages as well. Withdrawing from it serves no purpose beyond placating protectionists and certain industries. While it is true that we should seek advantages in the partnership, we should also recognize our obligation to seek benefits for our partners. It would make great economic sense to reenter the TPP, but that – like much else discussed here – must await a more progressive, less regressive, less protectionist, and less backward-looking congress. That too is up to active voters.
Continued in Part 20 — Media
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Return to Part 18 — Homelessness
Go to Part 21 — War, National Security
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Above is the nineteenth of numerous submissions wherein I suggest ways our country, our government, and the world can be made better. I am an old fart in my 70’s and have seen much: the turmoil of the 1960’s; Vietnam (where I served as an infantry officer and was awarded a purple heart and other medals); the anti-Vietnam protests (in which I participated while still in uniform); Watergate, the rise of the right wing attack on the poor and powerless during and after the Reagan years; the continued wars in Grenada, Panama, Iraq, Afghanistan and pretty much everywhere else; the Clinton years, the invasion of Iraq in 2002 and the never-ending war since; the brief glow of sunshine during the Obama years; and now Trump. While my dog in this fight is getting long in the tooth, I still deeply care about three things: my country, my country’s honor, and the future we leave to our descendants. My personal history, other than military service, includes college teaching, computer support, hospital IT supervision, consulting, and now — in my retirement — substitute teaching.
I make my recommendations in all seriousness, recognizing that most of them are not immediately attainable. Nevertheless, if we elect people who share our values as our representatives at all levels of government, we can accomplish much.