Import tariffs damage the economies imposing them

In its interim report 18 months after the U.S. imposed special tariffs on steel imports, the International Trade Commission (ITC) says that in their first year, the tariffs imposed by the U.S. cost that economy $680 million.

While American steel makers have benefited from the tariffs, steel users – from car to appliance manufacturers – were harmed.

According to the ITC:

A quarter of U.S. companies surveyed reported losing business to foreign competitors since the tariffs were imposed.

A third of these steel-consuming companies said that they had difficulty getting the steel they need because contracts with suppliers were either modified or broken when the tariffs were imposed. The corresponding loss in reported profits totalled $190 million.

Interestingly, near 34 percent of the steel-using companies say employment would go up if the tariffs were lifted.

The ITC report argues that these private-sector losses are almost entirely mitigated by the $650 million in new revenue the government received from the tariffs – but the Wall Street Journal observes that same logic has been used against cutting taxes.

Source: Editorial, Steeling Our Wealth, Wall Street Journal, September 23, 2003.

For more on the case against protectionism http://www.ncpa.org/iss/tra/

FMF Policy Bulletin\30 September 2003