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To help set the record straight and provide some balance by presenting the unheard voice of the American consumer as Trump ramps up his “American Consumers
First Last” trade policy, below are some edits of today’s news reports on Team Trump’s tariffs on imported washing machines and solar panels.
U.S. trade officials said the tariffs are critical to protect politically-favored American companies with the equivalent of corporate welfare and to make good on the Trump administration’s promise to put American producers first and American consumers last. The tariffs are aimed mainly at American consumers and companies who buy imports from Asian manufacturers—Chinese makers of solar panels and South Korean producers of washing machines.
Major U.S.-based energy and consumer appliance stocks jumped Tuesday after President Donald Trump’s decision to slap tariffs on Americans who purchase imported solar cells and washing machines. Shares of U.S. home appliance manufacturer Whirlpool jumped 5 percent on Tuesday reflecting the generous protectionism against more efficient foreign rivals the company received from Team Trump.
The Trump administration will impose a 20 percent tariff on American consumers for the first 1.2 million imported large residential washing machines in the first year and a 50 percent tariff on American consumers for machines above that number.
The Trump administration is imposing tariffs on Americans who buy imported solar panels and washing machines. The announcement marks President Trump’s first major trade action of 2018 and follows his campaign promise to get tough on America’s trading partners, even though U.S. consumers and companies who purchase imports will be greatly harmed.
A tariff, or tax, of 30% will be applied to Americans who buy imported solar panels, most of which come from China. Tariffs on U.S. consumers will begin at 20% on large residential washing machines, according to U.S. Trade Representative Robert Lighthizer.
“The President’s action makes clear again that the Trump Administration will always defend American workers, farmers, ranchers, and businesses in this regard at the expense of American consumers and U.S. companies who buy affordable imports,” Lighthizer said in a statement.
“U.S. Imposes New Tariffs, Ramping Up ‘American Consumers First Last’ Trade Policy”
President Donald Trump slapped steep tariffs on Americans who purchase imports of solar panels and washing machines, kicking off his second year in office by showing he is ready to start implementing his long-promised “American Consumers First Last” trade policy.
The moves were announced Monday in response to pleas from U.S. industries facing high labor costs for relief from a recent flood of consumer-enhancing cheap imports and are the first of what administration officials said would be a series of trade-enforcement crony capitalism, corporate welfare actions in the coming months.
The tariffs are aimed mainly at Americans who buy imports from Asian manufacturers—Chinese makers of solar panels and South Korean producers of washing machines. But the administration announced few exceptions for any countries, indicating a willingness to impose comprehensive new anti-consumer protective policies for U.S. companies against global competition.
Bottom Line/Economic Lessons:
1. Punitive tariffs are taxes on American consumers and businesses, in this case on those who buy washing machines and solar panels in the future. Even those consumers who buy domestically-made Whirlpool washers or solar panels will pay higher prices in the future as a result of the reduction in competition.
2. Trump’s new tariffs are part of his “American Consumers
First Last” trade policy that favors politically-powerful US producers at the expense of the US consumer. Notice that Trump and his trade team NEVER mention the viewpoint of the US consumer, and in fact they almost never even mention the word “consumer” when they discuss trade issues. All you hear from Team Trump is the viewpoint of the US producers and their workers, and never anything about what should be the group that receives the greatest consideration when economic issues are discussed: the consumer. Favoring US companies and industries with corporate welfare and crony capitalism by protecting them from lower-cost foreign competition suggests that Trump’s promises to “drain the swamp” weren’t really serious. The Washington swamp just got a little deeper and more noxious today — Exhibit A: the 3.2% run-up in Whirlpool’s share price today, which was 14.5 times the 0.22% increase in the overall market today measured by the S&P 500.
3. It’s just a basic, irrefutable economic fact that you can’t reduce competition, restrict choices, raise prices by favoring producers over consumers with trade policy, and create economic prosperity in the process. Rather, we know from economic theory and mountains of empirical evidence that protecting domestic firms from competition is guaranteed to impoverish countries that restrict or prohibit trade. If you’re not convinced of that economic fact, ask yourself this question:
Are consumers better off today due to innovative technologies for ride-hailing services like Uber and Lyft that have increased competition dramatically, or were they better off when competition was restricted and Big Taxi was the only option? If you think the Big Taxi model of transportation was better for consumers with high prices, inferior service, and a lack of competition and choice than what they have today, then you’ll probably applaud Trump’s trade policies and his tariffs on washers and solar panels. But if you correctly understand that a competitive market for transportation is far superior to the Big Taxi model, then you’ll realized that Trump’s trade policies are an “American Consumers Last” policy, which is the same as an “America Last” policy.
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