Recently China has started to become important topic in the election. Each candidate promising they they will be the hardest on China. They are trying to convince that China is cheating or not playing by the rules and their reasoning for this is that China can provide a cheaper good than our industry but isn't that competitive advantage. By putting tariffs on China's imports really improve our standard of living in this country.
In class an article was presented in class that got me thinking about this question. In this case President Obama a special tariff on imports of tires from China. This looks like a very important step in getting our economy back on track and that is what President Obama and most of Americans think. In reality this is not true. As individuals we are producer of only one good but consumer of thousands and by tariffs only help the producers of that product create inefficiencies in our economy, actually increase unemployment and our standard of living drops. The article states that consumers spent $1.1 Billion more as a result of these tariffs. Money that should have spurred economic growth but didn't. It lead to more unemployment because it created a problem of inefficiency. Since resources are tied up in the production of tires it can't be used in our industries that we are competitive in, our exports and that foreigner buy.
We have a free trade market which I see it as being if you can produce something at a lower price you should and then introduce it to the market. If the other producer cant match the price he should go into another industry or risk the chance of going out of business.
I also see a lot of similarities to this to a similar situation that US producers were in back in the 1970s and 1980s. Japan back then was the one getting accused of unfair trading policies and the US acted in the same way as today. Here I found a video on YouTube where Dr. Milton Friedman talks about international free trade and I agree with him.
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ReplyDeleteI watched the video by Friedman.It's very helpful.You mentioned Japan in 1980s which I also want to talk about for my next post.
ReplyDeleteI think American govenment have other desires behind the tarrifs.There are lots of intelligent and rational economists help US government.I think the difference between them and Friedman are ethical issues.
That is instead of recovering US economy,they want to conquer Japan without using weapons.
As I think, we agree with free trade, however, there're still lots of obstacles that affect the international trade.
ReplyDeletePeople agree with free trade and say that it is good and fair for competition and development, on the other hand, we can see that countries want to protect their own industry with subsidy and tariff. There is the contradiction.
Even tariff doesn't work, people still use it to protect their industry, making the economy worse.