“The Australian government has announced it will abolish close to 500 ‘nuisance’ tariffs from July 1, reducing the cost of importing everything from toothbrushes to roller coasters and bumper cars,” reports The Wall Street Journal.
This is “the biggest unilateral tariff reform in at least two decades.” It will benefit Australia financially, by preventing customs backlogs and thus, in some cases, allowing Australian manufacturers to more easily obtain inputs imported from abroad:
Removing the tariffs will cost the budget $19.9 million (30 million Australian dollars) in lost revenue annually, but help to streamline $5.6 billion (A$8.5 billion) in annual trade. Australian workers and businesses aren’t protected by these tariffs, but they still have to navigate the red tape involved and bear the costs of complying with the tariff regime, Australia Treasurer Jim Chalmers said in a statement Monday. The changes end 14% of Australia’s total tariffs, he added.
Some of the nuisance tariffs to be axed affect imported products including washing machines, tires for agricultural vehicles, toothbrushes, and bamboo chopsticks.
Tariffs can kill jobs by provoking retaliatory tariffs, or making other countries keep their tariffs in a tit-for-tat response.
In the United States, the “Trump-Biden tariffs” have come at “a high cost” to our economy, notes an article in the Wall Street Journal. The Biden and Trump policy of “protectionism shrinks rather than expands production. It does so most directly by obstructing U.S.-based producers’ access to inputs. As Dartmouth’s Douglas Irwin has shown, more than half of American imports are raw materials or intermediate goods used as inputs in production. Restricting these imports raises producers’ costs and thus hamstrings American production and competitiveness. Every job ‘created’ or ‘saved’ by tariffs, which force American consumers and users of protected inputs to pay higher prices, keeps noncompetitive firms operating.”
U.S. tariffs caused a trade war with China that drove up farm bankruptcies and may have helped Biden beat Trump in Wisconsin in 2020.
In 2020, CNN reported that
US farm bankruptcies were up 20% in 2019, despite the billions of dollars in aid President Donald Trump has paid to farmers hurt by the trade war with China.
That’s the highest level since 2011…There were 595 Chapter 12 family farm bankruptcies, nearly 100 more than in 2018…China retaliated to Trump’s tariffs with duties on a range of American farm goods. As a result, exports of soybeans to China nearly stopped for about a year. Prices plunged and a record number of soybeans to piled up in storage. To make up for some of those losses, and shore up political support, Trump has allocated a $28 billion aid package for farmers over the past two years. Most of that money was paid to farmers directly, and about $4 billion was used to purchase surplus food for food banks and given to groups that promote agricultural aid. The aid payments boosted farm income, which was projected to be up 10% in 2019. It would have shrunk without the subsidies.
Trump’s trade wars came at a political cost for his administration. “Across the Midwest, Farmers Warn of GOP Losses Due to Trump’s Trade Policy,” reported the New York Times in April 2018.
In states like Iowa, some farmers who support the GOP in local elections turned against the GOP in Congressional elections due to Trump’s protectionist trade policies. In 2018, the Des Moines Register reported that, “Iowans delivered an apparent rebuke of Republicans in Congress while seemingly validating GOP efforts at the state level.”
Despite the political harm Trump suffered from his protectionist tariffs, Biden has continued Trump’s protectionist policies, which economists have criticized.
