Costs of Tariffs
Each term our principles of economics classes look at the issues of free trade versus protectionism. We review the theory – comparative advantage – that argues for free and open markets among nations. And we review the common arguments used to defend tariffs and other trade restrictions. At the top of this list is saving domestic jobs. We also think through the winners and losers when tariffs are imposed on foreign made goods. The biggest “losers” are consumers, who must pay higher prices on both the foreign made goods and the domestic goods.
Prof. Mark Perry, from the Univ. of Michigan Flint Campus produced data to show the cost of tariffs imposed on foreign sugar entering the United States. Hat tip to Economix for the link. Here is a chart from his blog showing US vs. world sugar prices:
Oh – the answer is…$826,000 in annual consumer and producer costs per U.S. sugar job saved.
I teach principles of economics courses and a course in the economics of healthcare at Southern Oregon University.