Import Tariffs or Free Trade?

As we learned in class on Wednesday, tariffs are not beneficial to the consumer.  Many people believe that the government should reduce tariffs so that Americans will be able to buy more at a lower price.  I found an extreme version of this idea in the article attached in the title of this blog post.  The author suggests that our government should dispose of all unilateral import tariffs and quotas.  His point is somewhat valid based on the empirical data charts provided in the article.  These charts show how a reduction of import tariffs in countries such as Chile, China, Australia, and New Zealand have all resulted in a dramatic increase in economic growth. 

However, the idea of cutting or completely disposing of import tariffs is highly unlikely due to political pressure.  Opponents say that the economic value from cuts is modest at best.  Companies that want lower or no tariffs would also require political action by persuading their local legislators.  Those that back import tariff eradication argue that our current tariffs are aimed towards developing countries, while more developed countries face near zero taxation on their exports to the U.S.  The article refers to this dispersion of tariffs as a two-tier tariff system. This is true, but I disagree with the article’s negative attitude towards higher tariffs from developing countries.  The main reason these tariffs are higher is due to the types of products that come from developing countries that compete against domestic laborers as opposed to imports from already developed countries that are similar to American products.

Personally, I agree with the idea that import quotas should be disposed of because of their possible extreme effects on multiple economies.  On the other hand, I disagree with completely free trade.  I think that the ease and amount of government revenues collected is too high to just get rid of completely.  However, an alternate idea could be for the government to lower income taxes that would give Americans a higher disposable income.  To counteract the lower tax, the government could raise some import tariffs to still bring in equal tax revenues.  This may potentially protect domestic jobs while making the average Joe even happier by lowering income taxes.  The downside to my idea is the negative impact on the exporting countries, but if the two-tier system is taxed more evenly then the increased tariffs will be absorbed more easily.