If Trump really wants to address American corporations’ competitiveness problems, instead of adding their costs with tariffs, he should be cutting their costs with regulatory reform. From Eric Peters at ericpetersautos.com:
President Trump has imposed tariffs – a word used to prevent people from regarding them as the taxes they are – on vehicles not made in the United States, so as to make them cost as much as (or more than) vehicles made in the United States. The key point here is that taxes do not make anything cost less.
The same as regards compliance – i.e, the cost incurred complying with government regulations. Tariffs (taxes) do not reduce the cost of compliance. What they can do is raise the costs of the goods that escaped the costs of compliance.
This is something Trump – or the people who support his imposition of tariffs (taxes) – do not understand.
It costs more to make everything in the United States because of the costs of compliance. A good example that will make the point is the cost of chrome-plating anything in the United States. It is so expensive that there are not many companies left int he U.S. that still chrome-plate parts; instead, they import chrome-plated parts – because it costs less to import them than to chrome-plate them in the United States. That is to say, even factoring in the cost of having these parts shipped across an ocean, it still costs less to have them chrome-plated in another country and shipped here than it costs to chrome-plate them here.
