What is the effect on the economic well-being of a nation when a tariff is impos
ID: 1242584 • Letter: W
Question
What is the effect on the economic well-being of a nation when a tariff is imposed?..... Consult a newspaper and identify an industry where there currently is a tariff.....please provide the source.. What is the effect of this tariff on the U.S. economy?... Think about all the things you buy that are made in China? It is a sizable portion of your Disposable/Discretionary Income. Now imagine that ALL those goods increased in price by say 15%? is that "good" for you? You will have less effective 'consumption' power, literally less income to buy the stuff you need. Is that GOOD?... If China bends to global pressures to "float" its currency that is what will happen - this is the same as taxing or tariffs, the increased cost will be shared, we will buy less, China will be paid more, our manufacturers will get a 'bump' in profits, we may see a bump in employment (that will probably not happen, more manufacturing will be done In India and Indonesia, not USA). Comments?...Explanation / Answer
There are two big problems with this theory, however. One is that the analogy between agriculture and manufacturing is profoundly misleading. The gains in agricultural productivity that transformed this country in the twentieth century are fundamentally different from the gains in manufacturing and distributive productivity we are seeing today. The other, related problem is that our bullish measures of productivity suffer from an enormous statistical blind spot. Rather than wait for rising productivity to save the day—and relying on economic policies that are essentially complacent—the U.S. needs to adopt drastic measures if it wants to keep living standards from falling. Consider, for a moment, what a farmer has to do to improve the yield of a corn or wheat field in Kansas or Nebraska. Machinery has to be purchased to plant and harvest the crops. Pesticides and herbicides have to be applied to fight bugs and weeds. Irrigation has to be used appropriately to make sure the crops mature as desired. In a very real sense, agricultural productivity is intrinsically rooted in American soil. Yes, the tractor might be imported from Japan. But a farmer cannot plant crops in Iowa and then outsource the harvesting to Vietnam. Pesticides have to be sprayed on American bugs, and crops have to be irrigated with American water. Most of the value created by agriculture is made in America. By contrast, most manufactured goods these days are the product of global supply chains, which may include multiple countries and border crossings. Your smartphone, for example, is assembled from components that were manufactured all over the world. On a less high-tech note, the cedar hangers that organically keep your suits and dresses free of pests may be made of wood grown in the U.S., shipped to China for manufacture, and then shipped back to the U.S. again. Given the dominance of global supply chains, manufacturers and distributers both have two very different strategies available to them for cutting costs. On the one hand, they can invest in raising productivity in their domestic operations. A midwestern auto factory can rearrange its assembly line to produce more cars with fewer workers; a retailer can shift more sales to its online division; a real estate agency can invest in contact-management software to help fewer brokers manage more potential buyers and seller
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