Free trade supports lots of Tennessee jobs

Free trade supports lots of Tennessee jobs

December 26th, 2011 in Opinion Free Press

There is often a temptation during tough economic times to "circle the wagons" by clamping down on foreign trade. Imported goods as well as U.S. companies that have some facilities overseas are blamed for destroying jobs here. Government at times responds to such complaints by imposing high tariffs on imported goods, or by trying to punish U.S. companies that have facilities abroad.

Those responses are unwise at best and disastrous at worst.

International commerce is not a one-way street, and restricting it harms not just other countries but our own citizens. Imposing high tariffs on imports, for instance, drives up prices for goods by reducing competition. It also encourages other nations to slap tariffs on U.S. exports, hurting our workers. In fact, tariffs were among the key causes of the Great Depression.

In the same way, if our country penalizes businesses that build facilities abroad, we risk other countries retaliating by making it hard for their companies to build facilities in the United States. Imagine if Germany had made it prohibitively costly for Volkswagen to build its giant manufacturing plant at Chattanooga's Enterprise South industrial park.

The importance of foreign investment to Tennessee was brought home in a little item that appeared recently on the Business page of the Times Free Press. The article listed the five nations that have invested the most in our state:

• Japan's 179 facilities here represent a $14.6 billion investment.

• Germany's 68 facilities in Tennessee make up a $2.6 billion investment.

• Canada has 84 facilities in Tennessee, for a $1.2 billion investment.

• The United Kingdom's 124 facilities in Tennessee represent $1.1 billion worth of investment.

• And Sweden's 19 facilities here total a $552 million investment.

All told, those five nations' investments account for almost 77,000 jobs for Tennesseans.

Then there are the estimated 139,000 jobs in Tennessee that are supported by exports that companies in this state ship around the world.

A recent study by the Business and Economic Research Center at Middle Tennessee State University found that in Hamilton County alone, 11,000 jobs are linked to exported goods. The study also found that nearly 200 Hamilton County businesses are involved in exporting, and that in Tennessee, Hamilton County is second only to big Shelby County - which includes Memphis - for the number of businesses that export goods.

In short, international commerce and free trade are vital components of Tennessee's and our entire country's economic health. We don't want to do anything to imperil any of the approximately 220,000 Tennessee jobs that are supported either by foreign companies' investments in our state or by exports from Tennessee companies to foreign nations.

Washington should bear that in mind as the Obama administration considers imposing tariffs of up to 250 percent on some imported solar panels - in order to make U.S.-made solar panels more competitive. High tariffs would drive up costs for U.S. consumers and further subsidize the heavily, and wrongly, subsidized solar industry. Communist China is already hinting at imposing retaliatory tariffs that would hurt the foreign market for U.S. goods.

There are many things Washington could do to improve the U.S. economy, but imposing hefty tariffs and potentially starting a destructive trade war with Communist China or any other country surely isn't one of them.