Why the Reciprocal Trade Act’s ****-for-Tat Tariffs Aren’t a Good Idea

The Daily Signal | 2/26/2019 | Staff
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Patrick Tyrrell is a research coordinator in The Heritage Foundation’s Center for International Trade and Economics.

Anthony B. Kim researches international economic issues at The Heritage Foundation, with a strong focus on economic freedom. Kim is the research manager of the Index of Economic Freedom, the flagship product of the Heritage Foundation in partnership with The Wall Street Journal. Read his research.

Trade - Policy - Theory - Reciprocal - Trade

“Reciprocal trade policy” sounds good in theory, but the proposed Reciprocal Trade Act sounds less like the golden rule—“Do unto others as you would have them do unto you” (Matt. 7:12)—than the ancient Code of Hammurabi: “An eye for an eye, a tooth for a tooth.”

The U.S. Reciprocal Trade Act would cause unnecessary, self-inflicted pain, since all Americans benefit from international trade.

Tariff - Barrier - Measure - Policy - Trade

That’s because if a tariff or non-tariff barrier (any government-imposed measure or policy that restricts or impedes international trade in goods besides a tariff, such as an export subsidy or import quota) on a U.S. export to a particular country were higher than what we impose on the same good from that other country, the bill would allow the president to retaliate by raising a trade barrier equal to theirs.

The problem with that is, it’s Americans who actually pay the cost when U.S. trade barriers are raised, and it is thus Americans who would be retaliated against by the Reciprocal Trade Act.

Problems - Measure - January - Rep - Sean

Here are a few of the problems with the measure, as introduced in late January by Rep. Sean Duffy, R-Wis.

U.S. trade barriers cause Americans who buy products made in other countries to pay higher prices, which include a hidden tax paid to the federal government.

Barriers - US - Exporters - Tariffs - Products

Those barriers also harm U.S. exporters, who face higher tariffs on their exported products when other countries wage a reactionary trade war based on U.S. policy and decide to discriminate against U.S.-made products.

Research...
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