NCPA - National Center for Policy Analysis

Trade Barriers

November 24, 2003

President Bush has shown incredibly poor judgment in trade policy ever since taking office, says Bruce Bartlett. His steel tariffs backfired by costing more jobs in steel-using industries than were saved among producers, and its budget-busting agricultural subsidies doomed a multilateral trade agreement. Now he is making the same mistake with new trade restrictions on imports of some Chinese textiles.

A new report from Consumers for World Trade quantifies the impact of trade barriers on American families, concluding that the cost of protection is quantitatively large and impacts most heavily on those with low incomes.

  • In the aggregate, both tariffs and quotas add about 6 percent to all the goods we buy, but because low-income families buy more of the things that import restrictions affect, they pay more.
  • Minorities are estimated to pay 6.9 percent more on average and single parent households pay 7.5 percent more.
  • Every family would get the equivalent of a $238 per year tax cut if all import restrictions were abolished, according to the report.
  • It notes that "tariffs are highest on the goods important to the poor." For example, a tariff of 48 percent is applied to sneakers costing $3 or less.
  • This means that poor people, the ones most likely to buy such shoes, pay $4.79 instead of $3.23, which is what they would sell for without the tariff.

Another problem with trade protection is that it invites retaliation. The day after the U.S. textiles decision, China canceled a trade mission to the United States that probably would have led to billions of dollars of orders for American goods, says Bartlett.

Source: Bruce Bartlett, "Trade Barriers," National Center for Policy Analysis, November 21, 2003.

 

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