The Tariff People are everywhere on Parliament Hill and in provincial legislatures, causing dismay and economic destruction

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Among economically educated people, protectionism is discredited and calling someone “Tarif Man” would be considered an insult. In the case of Donald Trump, Tariff Man is a nickname he gave himself. After developing his perspective on international trade ignoring history and ignoring basic economics, Trump asserted that “trade wars are good and easy to win.” However, a report published several weeks ago by Moody’s estimated that 92% of the economic burden of its tariffs on Chinese products falls on American consumers, against only 8% on Chinese.

Moody’s report was consistent with other studies. As Professors Tyler Cowen and Alex Tabarrok report in their Modern Principles of Economics, “Looking at thousands of products, economists estimated that Trump tariffs were on average fully passed on to consumers, just as the simple model predicts. of supply and demand ”. Tariffs, according to a Tax Foundation analysis, were one of the biggest tax increases imposed on Americans in decades.

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Trump targeted the tariffs on China but, proving that trade wars are in fact bad and easy to lose, ended up attacking the Americans. This economic damage was not mitigated by the election of Joe Biden, as voters simply traded one Tariff Man for another. Biden and the Democratic Party depend on political support from unions, which in turn depend on government protection from competition, so Biden remains committed to upholding Trump’s tariffs. Whether the Republicans or the Democrats are in power, there is always a Tariff Man in charge.

The prevalence of Tariff Men, unfortunately, is not limited to the United States. All major political parties in Canada are led by Tariff Men (and a Tariff Woman). The Tariff People are everywhere on Parliament Hill and in provincial legislatures, causing dismay and economic destruction, either by creating new barriers to trade or by fighting to preserve existing ones. The only exception, perhaps, is the Conservative government in Alberta which, to its credit, dramatically reduced interprovincial trade barriers.

There is, however, no reprieve from protectionism on the part of the federal government. Last month, it imposed new tariffs of 295.5% and 101.5% on upholstered furniture imports from China and Vietnam. As the difficulty of buying housing is already a concern for many, the government has decided to furnishings more expensive houses too. The rationale for the tariffs was that they were necessary to “offset the harmful effects of dumping and subsidies”, which is nonsense. If foreign governments want to subsidize our consumption, why should we complain?

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It’s not just Chinese furniture. When the US government complained last week that Canada was overpricing imports of US dairy products, Justin Trudeau said he would fight to maintain tariffs and “defend Canadian jobs.” But by defending certain Canadian jobs, it necessarily destroys others. Tariffs and other protectionist measures do not create net new jobs; they only redistribute jobs from productive industries and enterprises to those which are protected or subsidized. Total employment is not affected, but total production decreases.

How much is all this protectionism? To use the example of supply management, the total value of the quota – that is, the financial value of the right to sell agricultural products at above-market prices – on the balance sheet of Canadian farms is amounted to $ 37.5 billion at the end of 2019. The cost to consumers is actually higher, since this figure does not include the lost economic value of reduced consumption due to inflated prices.

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In addition to tariffs on furniture, agricultural products and much more, the Tariff People often impose protectionism through regulations and subsidies. Across the political spectrum, politicians and pundits have used the pandemic as an excuse to call on the government to repatriate supply chains and subsidize or protect domestic manufacturing companies. But the results of these policies are the same as tariffs: jobs are reallocated from the most productive industries and firms to subsidized or protected firms, and everyone pays more, either through higher prices or through higher taxes. high.

The Tariff People likes to say that protectionism is necessary to protect workers. People on the left, as Liberal Minister Mary Ng demonstrated in her remarks at the last meeting of the North American Free Trade Commission, also like to argue that government interventionism on trade is necessary to protect environment and advance gender inclusion. In reality, when it comes to commerce, the only thing we really need protection against is the economic and social engineering of the Tariff People.

Matthew Lau is a Toronto writer.

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