Question

During the summer of 2017, fifteen former leaders of the White House Council of Economic Advisors signed a letter to President Trump urging him not to place tariffs on imports of steel into the United States. The letter notes that “Among us are Republicans and Democrats alike, and we have disagreements on a number of policy issues. But on some policies there is near universal agreement. One such issue is the harm of imposing tariffs on steel imports.” Tariffs are taxes imposed by government on imports. Those who endorse tariffs and other barriers to free international trade believe that such barriers protect domestic industries and the jobs of their employees.

Why do many economists, including those who have served for both Republican and Democratic administrations, support free trade policies and oppose tariffs and trade barriers even if these barriers are designed to protect domestic workers from losing their jobs? What types of jobs would be most vulnerable to job losses due to competition from imports?

Answer 1

Sol :

The reason why many economists, including those who have served for both Republican and Democratic administrations, support free trade policies and oppose tariffs and trade barriers even if these barriers are designed to protect domestic workers from losing their jobs is because it instigates trade wars among various nations and other negative results of tariffs and trade barriers incorporate more significant expenses for customers and businesses, counter by foreign governments, and a debilitating of the global rules-based trading system that will doubtlessly hurt U.S. interests enormously in the long run and furthermore it's image because USA has been a pro-trade nation which promotes free trade and lower tariffs for imports.

And one of the prime examples is the consequence of trade war with China, Institute of International Finance announced that the U.S.- China exchange war is "costing the U.S. about $40 billion every year in lost exports," which occurred after China raised it's tariff on U.S. merchandise from 3.1% in 2017 to 20% as of September 1 and this has prompted a breakdown in a large number of around 915 categories American products and this negatively affects the workers and exporters.

The damage import tariffs dispense on U.S. exports doesn't just emerge from foreign retaliation and lost export markets. It's additionally on the grounds that a competitive exporter depends on imports for some key inputs. As tariffs drive up these production costs, the competitiveness of U.S.companies endures as firms are compelled to raise proces. American-made merchandise/goods can get priced out of global markets.

So practically tariffs are a high-risk technique since you're using this to spur local employment or pay growth, but in doing as such, you're putting more jobs from industries like industrial goods, electronics, media and food services in danger than you're legitimately profiting through imposing tariffs.