15% Tariff

Your statement that corporations are outsourcing jobs bcause they can find cheaper labor elsewhere is incorrect. The U.S. send more FDI (Foreign Direct Investment to Belgium, the Netherlands, and Luxembourg combined than China, Mexico, and India combined. [1] Wages in the first three countries are much, much higher than those in the latter three. So why are U.S. companies investing in countries with such high wages instead of the cheaper ones? It's because American companies are creating jobs overseas, not moving them. Generally, U.S. corporations make things in foreign countries so that they can sell them in those same countries, and so FDI flows to richer countries because there's a larger market for selling goods. [1] U.S. Department of Commerce, Bureau of Economic Analysis, "U.S. Direct Investment Abroad: Capital Outflows Without Current-Cost Adjustment, 2007," International Economic Accounts, www.bea.gov/International/Index.htm Yes, some goods are being produced in 3rd world countries instead of the US. But why is this a bad thing? We're better off buying cheap plastic crap from China than manufacturing it here. Because of the law of comparative advantage, both countries are better off specializing in things they're good at. So China and other 3rd world countries keep the low-paying jobs, and we specialize in high paying high-tech and service jobs. Jobs may be flowing overseas, but they're being replaced by better, higher paying jobs here. This tariff would also hurt lower and middle class families by forcing them to pay higher prices for goods. Tariffs increase consumer goods, especially goods such as clothes and food. Since low income people spend a much larger percentage of their income on consumer goods, they are disproportionally hurt by tariffs. For example, even our currently fairly low tariffs transferred $11.8 billion from American consumers to farmers, amounting to an annual 'food tax' of about $100 per household. [2] [2] Organization for Economic Cooperation and Development, Agricultural Policies in OECD Countries: At a Glance 2008 (Paris: Organization for Economic Cooperation and Development, 2008), pp. 84-85. Protectionists often try to argue that tariffs will save manufacturing jobs. A popular example is the steel industry, which faces considerable foreign competition. A tariff on steel could save jobs in steel plants, because our steel manufacturers would face less competition. But policies always have unintended consequences. If there's a tariff on steel, the price of steel is increased, and this hurts every sector of the economy that uses steel in its products. The tariff would save some jobs, but destroy many others. All of the above applies only to the effects of the tariff itself. In addition to these negative effects, enacting a tariff will cause other countries to enact retaliatory tariffs on U.S. goods. This would make it much harder for us to sell goods abroad, crippling our export industries. So, to recap, tariffs hurt anyone who works for a company that buys things from abroad, sells things abroad, and anyone who buys anything. Who would benefit? Elite interests able to lobby Congress to give them special protection from competition. Inefficient failures that need subsidization to stay afloat.