Back when Obama placed the tariff on Chinese tires I bought two set of tires — one before for daughter #1 and one after for daughter #2 – same tires for the same car. The second set was $200 more. That of course meant we didn’t spend that $200 elsewhere — on dinner and tip, on the local theater, somewhere. So someone was harmed. It’s just that that information is not in the data. That tariff cost about $1,000,000 per job to save 1200 jobs. Not particularly efficient. I expect similar results from these tariffs, perhaps worse because they are intermediate goods and not final goods, so cause more disruption to more markets. NYC was considering an office to regulate the adoption of technology – if too many jobs were likely to be destroyed then it would be banned . Things like self-check lines at grocery stores and self-service gas stations would be banned.
After reading these essays what do you think about protecting manufacturing industries from international trade? Who is benefitting from the tariffs on steel and aluminum? Who is losing? Do you think more people will benefit than will lose? Why or why not?
Trade protectionism is a policy that protects domestic industries from unfair competition from foreign ones. The four primary tools are tariffs, subsidies, quotas and currency manipulation. Protectionism is a politically motivated defensive measure. It makes the country and its industries less competitive in international trade. Tax imports raises the price of imported goods.
A 25% tariff on all imported steel was imposed and a 10% tariff on aluminum from the European Union, Canada and Mexico was also imposed. What is notable here is that these were our top trading partners and allies, and they were not happy with these additional tariffs.
Only a small fraction of the overall U.S economy was impacted by these tariffs. Trumps tariffs on wasing machines, solar panels, steel, aluminum, have covered only 4.1% Us. Imports. It is said that trump administrations new tariff was very poorly received. Almost 80 % of the 60 economists believed that the tariffs on steel and aluminum imports would actually harm the US economy with the rest believing that the tariffs would have little to no effect. Economist thought that the tariffs would benefit the economy.
Look up the employment trends in manufacturing. (Try the Bureau of Labor Statistics). When did manufacturing employment reach its peak? How about manufacturing output? Why do you believe manufacturing employment is declining while output increases?
“Today’s manufacturing output is at least 5 percent greater than it was in 2000, but it has become much more capital intensive and much less labor intensive. Accordingly, workers in the sector are more likely to have at least some college education than their counterparts of years past. But there are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980. These job losses have likely contributed to the declining labor force participation rate of prime age (between the ages of 21 and 55) U.S. workers. In “The transformation of manufacturing and the decline of U.S. employment,” (National Bureau of Economic Research, Working Paper 24468, March 2018), economists Kerwin Kofi Charles, Erik Hurst, and Mariel Schwartz examine the factors that have played a role in the decline of prime age manufacturing workers since 1980 and focusing in the 2000s.
Before examining the factors that have led to job losses, the authors discuss two periods that saw manufacturing employment fall sharply—1980 to 2000 and 2000 to 2017. Two million jobs were lost between 1980 and 2000 and 5.5 million jobs were lost between 2000 and 2017. The authors note that these losses have affected the employment rates of prime age workers, finding that a “10 percentage point decline in the local manufacturing share reduced local employment rates by 3.7 percentage points for prime age men and 2.7 percentage points for prime age women.”
https://www.bls.gov/opub/mlr/2018/beyond-bls/the-fall-of-employment-in-the-manufacturing-sector.htm
Priscilla's Microeconomic Blog 