International trade agreements are unnecessary

Friday, August 14, 2015

Tariffs were the largest source of federal revenue until the Federal income tax began after 1913. Since the dominant federal expense was defense, it seemed appropriate to have our federal budget paid primarily by the industries in countries that we were defending ourselves from or that were under our defensive umbrella. This still makes sense.

Another advantage of tariffs is that it protects or at least mitigates the impact of American industry competing with industries in countries with cheap labor, low taxes and few regulations regarding safety and environmental impact.

Competition with foreign companies has some benefits. In the 1970's. complacency in the American auto industry and in electronics companies had created an unacceptable deterioration in quality control.

Competition from countries with high quality standards served as a wake up call to American industry. This competition mostly came from countries where workers earned a living wage. Currently, the competitive advantage is held by countries in which workers labor under slave-like conditions.

As American taxpayers over the past century have taken on more of the burden of funding an expanding federal government, the protections against imports have declined, mostly through trade agreements that give some countries a special status.

With the exception of countries that we don't have trade with for political reasons, such as Iran and Cuba, there is no logical reason for favoring one country over another in trade.

Trade agreements should be avoided, and tariffs should be significant, but not so overwhelming as to encourage complacency.