Protectionism: When it should and shouldn’t be applied and the option of a Sliding Tariff

Protectionism: When it should and shouldn’t be applied and the option of a Sliding Tariff.

International trade can be a contentious subject for discussion depending on what side of the fence you are on. On one side, there are employees losing domestic jobs to international competitors and their cheaper imports. On the other, when trade protections are created, the US buyer ends up paying the price in terms of higher prices for items which are artificially inflated to accommodate the tariffs.
For good reasons, certain key industries must always be protected from international competition. The US must protect itself from Chinese dumping cheap steel into the American market because the US steel industry must still be production ready say if a war were to happen. If all steel were to be imported supplies might be cut off from the US market when it is needed most, for tanks and armament etc.
Another example of tariffs protecting a strategic domestic market is Japan and the rice trade. Rice is considered a staple to the Japanese diet and rice farmers are considered an asset which must be protected if external food supplies were to be cut off.
Tariffs can and must be applied to strategic industries and products, but they need to be applied judiciously. When tariffs are applied as blanket policies such as the newly mentioned 20% import tariff on all Mexican imports it only hurts the future economic development of domestic industry by providing a quick fix against economic competition and it hurts the US consumer by artificially inflating prices for the good that the tariff affects.
For the most part, companies in the private sector withstand regular and natural economic tides (ie. layoffs, downsizing, re-gearing the workforce for greater efficiencies and company expansions) Without these natural economic struggles companies become weak and complacent. Workers and management does not seek greater efficiencies which are needed to compete and the failure of the company a whole becomes a greater possibility.
But what should we do in the case of a non-critical industry which is suffering because another country dumping cheap imports into the domestic market? When tariffs are applied, they become very difficult to remove since the industry receiving the benefit will lobby to continue the subsidy well after the threat from cheap imports is over. The solution might be to apply a sort of Sliding Tariff which is in full affect when cheap imports are being dumped and peter off if the quantity of the dump diminishes on a yearly basis.

Just food for thought.
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Alex Gomez

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