AFP-SD State Director Calls Tariffs A Failed Trade Policy

Pat Powers

AFP-SD State Director Calls Tariffs A Failed Trade Policy

PIERRE, S.D. – In case you missed it, Americans for Prosperity-South Dakota (AFP-SD) State Director Don Haggar was recently interviewed by WNAX Radio 570 on the impact tariffs have on South Dakota’s economy, stemming from the ongoing trade war.

“Tariffs hurt the economy… and let’s face it, tariffs are a tax,” said AFP-SD State Director Don Haggar. During the segment, Haggar also emphasized the importance of free trade and less government interference in the market.

For more of Haggar’s interview, visit WNAX’s website here.

Background:

Americans for Prosperity-South Dakota has released a series of statements on the topic of trade:

AFP-SD Farm Bailouts Show Tariff’s Harm

AFP-SD Thanks Sens. Rounds, Thune and Rep. Noem for Protecting South Dakota Agriculture

Americans for Prosperity Reiterates Pro-Trade, Anti-Tariff Priorities

Recently, State Director Don Haggar penned an Op-ed in the Tri-State Neighbor that can be found here.

27 thoughts on “AFP-SD State Director Calls Tariffs A Failed Trade Policy”

  1. Yes, people just need to read a little history to learn that tariffs don’t work…meanwhile South Dakota pays the price

    1. Is free trade beneficial? Yes, although the benefits don’t distribute equally. System utility increases. Certain nations, firms, workers, and consumers realize gains. Some firms experience large gains. Most workers & consumers earn small gains, some remains static, while a few endure short-term losses (especially in relative wealth). Nevertheless, systemic gains devour the loss.

      Not every nation is equally able to produce all products efficiently. Thus, free trade might kill one local industry but, thanks to systemic enrichment, we can afford to retrain displaced workers & help them find work in more productive fields. There’s greater wealth, so we can (theoretically) reorganize distribution, letting the majority (winners) compensate the few (losers).

      I like free trade. Everyone should.

      Can a modest tariff benefit a specific industry? It seems obvious. If we impose a tariff on foreign steel, local steel producers can sell more or sell the same amount at a higher price. Consumers suffer (pay higher prices), but local steel producers gain. This creates jobs. And, when the tariff is collected, it funds our government. Assuming tariff revenue exceeds collection & enforcement costs, the government can pay down debt or increase services without increasing taxes. There’s no free lunch, but foreigners absorb most of the loss. This is the protectionists’ economic argument.

      So, why not impose tariffs? Because, economists teach, our trade partners will retaliate in kind. Imposing tariffs can ignite a “trade war” reducing benefits for all. Consumers pay more. Firms earn less. Jobs are lost, etc. Government revenue may increase a smidgen but (especially considering government inefficiency) that tiny gain is dwarfed by systemic losses. Productivity decreases. Wealth decreases. Income tax revenue decreases. Debt increases.

      Therefore, we should NOT impose tariffs because our rational trade partners WILL retaliate in kind by imposing high tariffs. Understood. That’s how the game works.

      Quick Question: how should Trump respond to tariffs that the EU and China have already implemented?

  2. If you figure that the purpose of a tariff is to generate revenue, by imposing a sales tax on things nobody really needs, like foreign-produced entertainment systems and recreational vehicles, they do actually work.
    When you look at what’s being sold in the duty-free shops at airports, you can see there is nothing there anybody needs.
    Why not tax the buyers? Taxing those purchases makes more sense than taxing medical equipment or food.

    If you think the only purpose of a tariff is to protect a domestic economy, you are right, tariffs don’t work. But if you think the purpose is to raise money for the government, sure they work. Why else impose a tax on tobacco?

  3. Because of incredible attention to the political side of International relationships this President of ours has created in the media we are supposed to believe now that the only reason corn and soybean prices have dropped is a result of the new proposed Ag tariffs. Shortsighted at best and unhinged from factual data concerning supply and demand and oversupply in reality. Any minor drought in either of the major soybean regions will result in beans in the teens with or without any new tariffs. And corn will follow suit.

    1. You can see the commodity prices suffer directly in line with the implementation of retaliatory tariffs. While soybean prices were suffering already, the tariffs made them worse. To argue otherwise in unhinged from freely available market data.

  5. It’s easy to say no and have no Solutions

    Tariffs are not a new thing all the other countries have thousands of terrorists upon us and we have sat back and done absolutely nothing but take it in the shorts…. I’m 100% behind the president because you got to change the dynamic….

    Even if he gets in the back off 10% or 20% and then we were move ours back it’s a victory compared to just letting them steal our intellectual property and impose tariffs on our Goods going into their countries if you’re not for tariffs then what is your solution?

  6. I’m not sure I understand the bebate about tariffs. If they do not work why do so many countries place tariffs and restrictions on US exports? How has the previous conventional wisdom served us to date? Isn’t Trump’s end game to eliminate & get true free trade? Then how do we know they haven’t worked yet?

  7. I agree with AFP. Free trad lifts the economic condition of both sides.

    That said, tariffs like trade sanctions can effect positive long term conditions. The President has embarked on actions intended to serve a long term strategic objective. It Is a high risk and high return strategy.

    If it works, we might be able to grow our way out of our unfunded liabilities like Social Security and Medicare. Ir it doesn’t work, hmmmmm I guess we go broke a few years earlier. Maybe it isn’t as risky as I thought.

    1. That assumes our President is a long-term strategist. I’ve yet to see evidence to believe this assumption. He is saying now that he wants to get to zero tariffs, but that was only after immense pushback. Trump has been pretty consistent about being a protectionist throughout his business career.

  8. Anon,

    It assumes nothing but Occam’s Razor- He has a history of negotiating a certain way and this is consistent with his history. Plus, if ends up bad policy, his Presidency will be impugned in history which is contrary to his interest.

    Regarding finally admitting he is for zero tariffs, I think him admitting it a mistake and a concession to the chicken littles who prefer no strategy and action over strategy and action. The less your opponent understands of your final objective, the better your odds of getting the best deal.

    Regarding being a protectionist during his business career, what are you talking about? You do understand micro-economics and macro-economics are distinct? Besides that would be like saying Obama would do everything as President he did as a community organizer, or Bush has a baseball club owner, etc. To the extent history is prologue, you have to layer in context.

    1. I had to look this one up.

      Occam’s razor is the problem-solving principle that the simplest solution tends to be the right one. When presented with competing hypotheses to solve a problem, one should select the solution with the fewest assumptions. Wikipedia

    2. Trump flirted with running for President in both the 80s and 90s and each time trade was one of his big issues. At one point he said we need to “tax the hell out of Japan” via tariffs. Of all the issues Trump has ever talked about, trade is the only one where his position has been consistent and it has always been on the side of protecting American companies from foreign competition, i.e. protectionism.

      Also, just yesterday he said he wants to use tariffs to make the steel industry “like the good old days, when U.S. steel was our biggest company”.

  9. I support a free and fair market within the political boundaries of a given nation state. Within our own borders, we as a people can, through our representatives in Congress, assure a free market system. There is not, nor can there ever be, any such thing as “free trade” between and among nations.

    1. that was also a basic tenet of milton friedman’s free-market outlook. i.e. that the political reality on the ground has a direct effect on how much, or even whether free market economics can be at play. i think the goal was to make sure that free market economics was as widespread as could be at all times.

  10. There is such a thing as free trade. However certain countries such as China likes to put restrictions that impede free trade. I beliehttps://ustr.gov/sites/default/files/files/reports/2017/NTE/2017%20NTE.pdfve it is appropriate to put on a tariff in response to the kinds of restrictions put on by the other country. If you would like to see some of the restrictions put on the US by China, check this out. https://ustr.gov/sites/default/files/files/reports/2017/NTE/2017%20NTE.pdf. For China, go to page 85 in the PDF.
    One of the things you will notice is China’s habit of stealing intellectual property. China also has been dumping steel on the US market with subsidies that make US steel uncompetitive. The list goes on and on.
    The difference between the markets in the US and China is that China cannot afford a long haul of losing US markets. China’s economy depends upon being able to sell products to other countries. Here in the US, our economy can often times consume what is produced. We are not as reliant upon exports as China is. In the long run, China cannot weather a trade war. In the end, I believe we will have fewer restrictions and eventually much freer trade. This will be good for all in the end.
    BTW, I believe we are seeing different countries willing to negotiating and improving our trade situation.

    1. Well said. I believe we’ll see China at the table by harvest time.

      It’s unfortunate that AFP doesn’t seem to want to support farmers and their families who are willing to make sacrifices for their country.

      1. Are you speaking for the entire farming community when you say they’re willing to sacrifice their livelihood for their country?

        That’s the entire problem with the tactic of tariffs. You are sacrificing one industry to benefit another. In this case, ag to benefit manufacturing.

        1. China is coming back to the table. Yesterday, futures were up based upon optimism of talks. There is a good chance of a NAFTA deal with Mexico. Canada will most likely follow suit. Thise things do not happen without being tough with countries practicing unfair trade tactics.

  11. Countries produce what they can efficiently and import what they can’t. This way, all countries win. Trying to produce everything is going to make us a bigger loser than if we left some industries to other nations. If Trump continues, he will create a much larger and longer lasting recession than any living person has seen.

    1. Well, Mr. Krogman, what you are not recognizing is that the US with its resources can produce many things at low costs. A few years ago, it made sense to import a lot of energy. Today, we are an energy exporter. When a country puts up artificial barriers to US goods, the US has a choice of taking it on the chin or responding in kind. Steel is an excellent example. Some countries are selling subsidized steel to our country. The US says no more, so those countries dump the steel in Canada or Mexico so they can get around the import blockage by taking advantage of NAFTA. I believe it is about time someone stood up and said no more. Fair trade does not mean being a floor mat.

  12. Enquirer,

    To make sure that nobody misunderstands what you said, Milton Friedman advocated all tariffs (except those defense/foreign relations related) be phased out over five years and eliminated permanently without regard to what our trading partners did.

    His rationale was exchange rate adjustments to compensate for trade imbalance would ultimately force other countries to adjust or their economy would implode.

  13. Since we have Milton Freedman, I think we all should listen to this and reflect on more than the economics. Also, when is the last time you heard this type of intellectual, fact based conversation on a college campus? Instead we have people from the left (and occasionally right) yelling about issues an inch deep vs. something of this level.

  15. And what is AFP’s solutions–continue to let the other countries put tariffs on us without consequences?

    1. Yes, I think they’d agree with you. My understanding is they’d like for the U.S. to lead the way with a no tariffs policy. Other countries will make decisions based on their feelings as well, they’ll notice how kind and generous we are being and would remove their tariffs implementing true free trade.

      So where would money the U.S. is currently receiving from tariffs now come from… you, because your federal taxes just increased. Great plan AFP.

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