Beware silly trade wars
As proof of the silliness of trade wars, exhibit 1 could be the recent article by Day Staff Writer Erica Moser that looked at the effects they can have at the local level. As a result of a relatively petty dust-up with the European Union, the Office of U.S. Trade Representative is considering imposing duties of 100 percent on certain items, in addition to 25 percent tariffs that went into effect Oct. 18.
The products that have or could be targeted range widely, from fish and dairy products to some clothing items, to single-malt Irish whiskeys and Scotch whiskies, lithographs, backhoes, non-military helicopters, and on and on.
The list is a long one and illustrates the nonsensical nature of a trade war tit-for-tat. The U.S. takes a hit on tariffs imposed on American technology companies, it responds with plans to place tariffs on French cheese, wine and handbags.
Local businesspeople, as they explained to our reporter, know this is bad for business. It complicates product purchasing decisions, denies manufacturers the special alloys they cannot function without or they would have to retrofit equipment to use other materials, and can be particularly destructive to a business that specializes in offering imported products.
And ultimately the tariffs — essentially taxes — get passed on to consumers in the form of higher prices. When the National Bureau of Economic Research, a nonprofit, nonpartisan organization dedicated to conducting economic research, studied a recent round of tariffs, it found that “U.S. tariffs continue to be almost entirely borne by U.S. firms and consumers.”
President Donald Trump has been fixated on protectionist policies to lower the nation’s trade deficit. The administration has seen some modest success. The thing is most economists don’t consider trade deficits as inherently bad. And by entering trade wars unnecessarily, the administration imperils a global free market approach that grows the world economy, suppresses prices, increases productivity and encourages innovation.
While open to addressing clear abuses, The Day editorially leans in the direction of free trade. The American economy can do just fine without imposing heavy tariffs on “Pecorino cheese, from sheep's milk, in original loaves, not suitable for grating.” Imagine the bureaucracy to track that tariff.
The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.
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