When President Donald Trump announced his latest tariffs on steel and aluminum, Republicans, conservative activists, and free market organizations were quick to denounce the move, arguing (rightfully so) that it will backfire and hurt Americans more than the exporting countries.
The president and many of his supporters espouse the 18th century mercantilist dogma that the 25 percent levy on steel will bring back American jobs and resuscitate an industry of yesteryear. Even though production and automation have harmed the domestic sector far more than imports have, they still think American steel will return to its dominance of the 1950s.
Well, let’s say, for the sake of argument, that it’s true. Tariffs on steel will ramp up employment from just over 100,000 to nearly 700,000 (the height in the 1960s).
Then why not add new taxes, restrictions, and quotas on other imports?
Here are some of the highest valued imports as of 2015:
– Phone system devices
– Electric generators
– Computer parts
– Oil
– Pharmaceuticals
To create jobs at homes, the U.S. government could simply institute an oil tariff, an iPhone duty, a generic pharmaceutical levy on imports.
It is true that the aluminum tariff would increase the price of the iPhone, but why not just avoid these indirect costs and place a direct tax on the mobile device? It’s all in the name of jobs!
By doing this, the U.S. could manufacture iPhones, the U.S. could add to its growing tally on oil jobs, and the U.S. could manufacture all of its generic drugs.
Protectionism can save jobs. In the USA the best measurement of the cost per job saved to the rest of the country is about $1 million per job saved. Saving one job might provide $100,000 in gains to the worker and the employer who benefit from the protectionism, but cost the rest of the country $1,000,000. Since the million dollars is just one third of one cent per person in the USA, no one notices it.
To save a million jobs via protectionism would cost the country a S1 trillion which would be about the same impact as a very severe recession. To save 10 million jobs via protectionism would cost the country a S10 trillion. That would make the USA a poorer country than Mexico. That would mean it would be likely the people born in the USA would be going to Mexico to work as servants and dishwashers. The degree of impoverishment that would result from that much protectionism is usually only associated with severe natural disasters or wars…”
http://seekingalpha.com/article/4032821