What Tariffs Actually Do

“Does a tariff on imports also reduce exports?” – Dr. North

Tariffs are taxes that the government instituted to be paid on imports to “protect” us from foreign competition. They restrain us from purchasing imported goods/services that we want. It makes goods/services more expensive for the consumer.

tariffs

Pro-tect-tion-ism

noun

The theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports. 

Protectionism is a misnomer. The only people protected by tariffs, quotas and trade restrictions are those engaged in uneconomic and wasteful activity. Free trade is the only philosophy compatible with international peace and prosperity. – Walter Block

Tariffs will definitely reduce exports. People in foreign countries paying these tariffs will not have as much money to buy our exported goods. In turn you will not have as much money to buy their goods. When this happens no one is getting what they want but the government.

It is also important to note here that tariffs will cause a decrease in competition thereby causing a decrease in quality of product. When there are less people to sell to it only makes sense that product standards will go down because companies feel less threatened. When the product is less available and we do not have many options we will pay a higher price for a poorly made item.

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Competition = Better Goods

trade-barriers1

“Would you pay 20% more to shop at a store that sells only American-made goods?”

To answer this question it would depend on what I am looking to buy, the quality of the good and who has the best price. I am going to buy what is best for me as the customer. Whoever can produce the best good for me will get my money. I am not going to limit myself from only buying in America if I can get what I want elsewhere.

I think we need to get rid of tariffs. I have read that countries with low tariffs are more prosperous than countries that have high tariffs. In the same article it stated that people who embrace free trade have higher incomes than the countries whose people do not. Tariffs also bring down the quality in products because it eliminates competition. Competition is good. When businesses compete with one another they are competing over who can make the best goods for the customers. Lazy workers like tariffs.

“We shouldn’t be putting tariffs on anything. That hurts working men and women in the U.S. What we should be doing is making our manufacturing more competitive.” – Rick Santorun

So going back to the original question I will buy what is best for myself. Having more choices available by means of free trade would be the best scenario.