NCPA - National Center for Policy Analysis

Protectionism Is Costly For Consumers

May 6, 1999

The U.S. may be the loudest advocate of free trade and open markets, but our hands are not altogether clean when it comes to "protecting jobs" by slapping on tariffs. American consumers are as much victims of protectionism as foreign exporters, because of the high prices they must pay for imported goods.

Protecting jobs is an expensive process, according to research by economists Gary Hufbauer and Kimberly Elliott.

  • Americans pay $438,356 for every sheltered job in the ball bearing industry.
  • Tariffs protecting the softwood lumber industry cost $758,678 per job, and $933,628 for each person employed in making luggage.
  • More than $1 million is necessary to protect each employee in benzenoid chemical manufacturing.
  • Overall, protectionism costs the U.S. economy more than $70 billion a year -- or 0.8 percent of gross domestic product.

Critics say the U.S. employs a double standard in its trade dealings with the rest of the world.

In March, for example, the Clinton administration launched a trade war to force European countries to buy more U.S.-marketed bananas and threatened a punishing response to Europe's refusal to accept U.S. beef. At the same time, the administration responded to pressures from steel makers, unions and Congress by limiting steel imports from Japan, Russia and other countries.

Source: James Cox, "Not Quite Land of Free Trade," USA Today, May 6, 1999.

 

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