LETTER TO THE EDITOR - How tariffs could actually lower costs
LETTER TO THE EDITOR
Let’s continue the discussion on tariffs that was started in last week’s edition.
Some countries are more suited than others to produce certain products, whether that be because of resources, labor availability, transportation accessibility, a trustworthy justice system, a solid banking and monetary system, a stable government, etc. In most cases, the preponderance of these factors favor America. For many decades globalist ideologues in American government have implemented onerous policies against American producers to offset these advantages. These policies include high corporate taxes, burdensome government regulations, and unfair foreign trade deals involving tariffs, currency manipulation, value-added taxes, and bans or quotas on American exports. Why have American politicians supported these anti-American manufacturing policies and practices for decades? Perhaps they are kind-hearted people who feel sorry for poor foreign workers. Perhaps foreign governments, foreign companies, and their American collaborators have found ways to reward or control the politicians. Who can say for certain what motivates a politician?
What is a corporate tax? It is a tax placed on all corporations by the federal government. The American corporations pay the tax and then pass the increased cost of their products on to the consumer. American corporations pay higher taxes than foreign corporations, which gives foreign corporations a competitive advantage over American corporations.
Who benefits from high taxes on American corporations? Foreign manufacturers, and American distributors and retailers who collaborate with foreign manufacturers, are the beneficiaries. American consumers pay the corporate taxes through increased prices, because ALL American companies will face the same increased input cost (corporate taxes). The only companies who benefit from these increased American corporate taxes are FOREIGN companies, who don’t pay American taxes. So, American consumers are motivated to avoid paying the corporate tax by switching from buying American products to buying foreign products. The effects of those buying decisions are closures of American factories, and the net loss of American jobs.
What is a regulation? A regulation is a rule created by government agencies to control and manage activities, behaviors, or processes. American manufacturers are required to spend money to comply with regulations. Manufacturers pass the increased cost of their products on to the consumer. American manufacturers have much higher regulatory costs than foreign corporations, which gives foreign corporations a competitive advantage over American manufacturers.
Government regulations are also used to restrict access to resources, and to increase the cost of resources. The most egregious, long-standing, and wide-reaching example is the restriction of access to America’s abundant low-cost energy sources, like petroleum, coal, and natural gas, while requiring energy companies to invest scarce capital into expensive “renewable energy” projects. For example, American government regulations have been forcing the closure of all coal-fired electric generators, while the Chinese government has been building them at the completion rate of more than one per week.
Who benefits from the high regulatory costs and high energy costs paid by American manufacturers? Foreign manufacturers, and American distributors and retailers who collaborate with foreign manufacturers, are the beneficiaries. Lower foreign regulatory costs reduce the cost of their products. So, American consumers are motivated to avoid the costs of American regulations by switching from buying American products to buying foreign products. The effects of those buying decisions are closures of American factories, and the net loss of American jobs.
Tax policies and regulatory policies have decimated American manufacturing, while strengthening foreign manufacturing. I have witnessed the effects of these policies all over the country, and all over the world. I have seen the multi-generational poverty among the people of North Carolina, who once operated a textile industry that was the envy of the world. The crumbling paper industry here in central Wisconsin is an example that hits close to home. I have witnessed the decay of once-thriving manufacturing communities like Detroit, MI, Milwaukee, WI, Rockford, IL, Gary, IN, Cleveland, OH, Chicago, IL, Davenport, IA, Lincoln, NE, and many, many more. I have also witnessed the spectacular growth of manufacturers in China, Taiwan, Germany, Italy, Sweden, Denmark, Finland, Spain, Turkey, India, Mexico, Brazil and many more foreign countries.
Driving through the rutted streets of Detroit’s rotting and rusting manufacturing districts made me sad and angry, when I recalled the beautiful industrial parks in Japan and China that are fueled by American investment and sales of products to America. I worked with one of America’s finest manufacturers. However, I told my colleagues that, if the workers from some Chinese manufacturers I visited were to visit our factories in Wisconsin, they would feel sorry for us.
What is a tariff? It is a tax placed on items imported from another country. The importer pays the tax and then passes the increased cost of the product on to the consumer. High tariffs have been placed on American goods imported by foreign countries, while America has placed low tariffs, or no tariffs, on goods imported from foreign countries. Why do foreign countries place high tariffs on American-made products? These tariffs give their manufacturers an advantage over American manufacturers.
Some critics of the current federal government are incensed by the proposal to raise American tariffs to match the tariffs imposed by foreign countries. Yet, they were unconcerned by high foreign tariffs on American exports for the last 80 years. There has been an enormous tariff imbalance in place since the end of WWII. The current administration is attempting to correct this imbalance. Tariffs could also be adjusted to protect American manufacturers from production cost imbalances caused by high corporate taxes and the high cost of government regulations. However, the current administration has chosen to reduce corporate taxes, and to eliminate unnecessary regulations to level the playing field for American manufacturers.
See LETTERS/ page 18 Letter
Continued from page 7
Raising tariffs on foreign goods will cause prices for imported goods to rise. However, in this case, the tariffs are not placed on domestic manufacturers. In fact, government income from tariffs will make it possible to decrease taxes on American consumers and taxes on American manufacturers. American manufacturers will be able to charge lower prices as their input costs decrease, and American consumers will have more disposable income. This will result in increased demand for American products by American consumers. These buying decisions will result in the construction of new factories in America, and an increase in good-paying American jobs. American workers will have more money to spend.
In the brief time the current administration has been in office, manufacturers have already committed about 10 trillion dollars to investment in American manufacturing facilities. This investment will create hundreds of thousands of new jobs for Americans to build and operate these factories.
Bruce Bohr Marathon
