Pages

Monday, November 21, 2016

To Restrict or Not Restrict Imports?

U.S. leaders are contemplating new economic policies and there is hot discussion on restricting or not restricting foreign imports as a way of create a level playing field.  Import restrictions must be used wisely and only when necessary least they permanently damage the economy. Those times are defined by abuses in international trade and as a method of seeding American businesses.

Economies are based on competencies of labor. When workers have knowledge and skill in certain areas they have a chance to compete internationally. To gain competencies it is necessary to have companies that employ and train people in those areas. The more jobs that employ skilled labor, the more competencies grow!

A problem occurs when countries like China dump, in violation of treaties and good business practice, products on the American market. Part of their motivation is to kill off American businesses that have no way of competing with ultra low labor and materials cost.

In cases where dumping is occurring, it is helpful to restrict these imports through greater tariffs to give American businesses a chance to grow. Where there is no illegal dumping, import restrictions can be harmful because the general market forces can't be thwarted for long without wild swings of market correction.

Tariffs and restrictions are helpful in the short run to seed businesses and to limit the harm of illegal practices. They are damaging in the long run where American businesses can't compete on their own merit, don't innovate to meet challenges, and live in an artificial bubble paid for by American taxpayers. Import restrictions are a powerful tool and should be part of a larger strategic tool kit to be used for specific purposes. `

No comments:

Post a Comment