Congress does so many of the wrong things – especially where the economic crisis is concerned – that it is like “shooting fish in a barrel” to point out those wrong actions. But sometimes Congress gets something right, so it’s only fair to point out those things, too.
Last summer, Congress quietly passed a bill that reduced or eliminated tariffs on many imported products that are used as raw materials by U.S. manufacturers. That reduced the prices for those raw materials. As a result, some manufacturers have been able to save enough money on materials to increase hiring, though modestly.
In the town of Norlina, N.C., for instance, a textile manufacturer was able to rehire dozens of third-shift workers who had been laid off. That’s because the owner had been able to save millions of dollars he otherwise would have had to spend on a specially dyed acrylic fiber imported from Europe, McClatchy Newspapers reported. Reduced tariffs made the fiber far cheaper.
Unfortunately, our nation has seen the opposite effect when it has imposed tariffs.
Some years back, President George W. Bush slapped a big tariff on imports of foreign steel. The goal was to protect a relatively small number of jobs in the American steel industry. But the tariffs cost far more jobs in U.S. industries that use steel because those companies had to pay higher prices for the metal.
The trouble with protectionist policies is that they “sound good.” After all, wouldn’t we want to “protect” our industries and workers from foreign competition? Wouldn’t that mean more jobs here?
History shows otherwise. Protectionism imposes artificially higher prices on American consumers by reducing competition, and it destroys jobs.
Freer trade is generally better.