Free Trade

Josh Hawley's Latest Plan To Hike Tariffs Would Be a Win for China

Shutting down the GSP program would reduce economic growth in developing countries and raise taxes on American importers.

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The latest legislative proposal being pushed by Sen. Josh Hawley (R–Mo.) aims for what might be thought of as the Triple Crown of contemporary conservatism. It misunderstands economics and the benefits of global trade, promises to hurt people who have done nothing wrong, and wraps itself in a feigned sense of toughness while actually doing more to help China than America.

Hawley's bill, introduced on December 8, would temporarily shutter the Generalized System of Preferences (GSP) program, a 1974 law that grants special import status to goods received from certain developing nations. The GSP program is a unilateral trade policy—that is, America reduces its tariffs to allow more imports from nations that qualify for GSP status even if those countries don't do the same in return—that recognizes the fundamental benefits of free trade. American businesses and consumers can buy duty-free imports, while businesses in those GSP nations gain access to the world's largest economy, which helps them grow.

Think of the GSP program as a libertarian form of foreign aid. Rather than throwing money at developing countries, it simply removes barriers to trade and lets the international market create growth.

Hawley wants to suspend the GSP program because he has a zero-sum view of trade and economic growth. If a developing country is getting special treatment, that means American workers must be losing out.

"Trade programs should protect American workers and help their families to prosper, not benefit foreign nations or mega-corporations," he said in a statement announcing the bill. "Yet, for decades our trade policy has decimated millions of American jobs. It's time to put workers at the center of our trade policy."

Under the terms of his bill, the Trade Preference Reform and Worker Protection Act, the GSP program would be suspended until unemployment in the United States falls below 4 percent—and it would be suspended again whenever America's unemployment rises above that threshold, which is most of the time.

Cutting off beneficial trade terms with developing countries won't help American manufacturing workers because they're not competing to make the same products. Under the terms of the GSP program, the lowered tariffs for GSP imports do not apply to goods deemed "import-sensitive"—that is, items widely produced in the United States whose industry lobbyists have convinced Congress that more international competition would be bad. Textiles and shoes, for example, are excluded from the GSP program. According to the Congressional Research Service, a think tank housed within Congress, the most common items imported via the GSP program are "travel goods" and "jewelry."

Unless American workers are going to start producing handmade Thai jewelry, Hawley's bill doesn't have much to offer. On the flip side, he would actually be hiking tariff costs on American businesses that continue to import goods from former GSP nations.

And while it wouldn't help American workers, Hawley's proposal would deal a serious blow to poor people running small businesses in those developing nations. A 2016 report from the Office of the U.S. Trade Representative found that "trade expansion induced by greater access to the U.S. market caused a significant acceleration in the growth rates of developing countries."

Perhaps in the hopes that other conservatives will ignore the actual reality of what he's proposing, Hawley staff have been wrongly presenting the GSP proposal as an attack on China. Facing criticism on Twitter, Kyle Plotkin, Hawley's chief of staff, defended the proposal by invoking the threat of American jobs being offshored to China.

Except, well, China isn't part of the GSP program at all. Ironically, terminating the GSP program would probably boost China by effectively raising American tariffs on imports from countries that compete with China. A 2019 survey of American importers found that if GSP was terminated, one-third of them would source more goods from China.

Hawley and his staff seem to be "paying a little too much attention to Twitter and not enough attention to the facts," Patrick Hedger, vice president of policy for the Taxpayers Protection Alliance, a free market nonprofit, tells Reason. "There are serious consequences to politics like this. Governing based on likes and retweets by playing to knee-jerk populism won't help anyone, besides maybe the politician engaged in it."

Though Hawley's bill is unlikely to become law, it's still worth noting because of what it says about the senator's view of free trade, as well as his populist approach to lawmaking that ignores inconvenient facts. After all, what he's proposing is a policy that would blame foreigners—not even immigrants, but literally people who haven't even tried to come here—for America's own economic problems, which the policy change itself would not fix. And in his rush to condemn free trade for all that is wrong with the world, he's not standing up to China but potentially handing it a larger share of global trade.

It is remarkable that Hawley has managed to pack so much of the ethos of Trump-era economic nationalism into a three-page bill, but that's what makes him a rising star.

Bryan Riley, director of the free trade initiative at the National Taxpayers Union Foundation, a free market think tank, describes Hawley's proposal as a "pro-communist China bill to encourage production in China instead of in developing countries" that are currently eligible for GSP.

"If you want to get tough on China," says Riley, "it would seem to make sense to reduce barriers to imports from other countries."

But it wouldn't be economic nationalism if it made sense.

NEXT: Joe Biden Taps Former Presidential Rival Pete Buttigieg for Transportation Secretary

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  2. China’s slave program might take a huge hit.

    1. Not while the media is protecting their slave and his son, Hunter.

    2. China is not part of the program, genius. Did you read the column?

      Protectionism should be in the ash heap of history, yet idiots running nations still support it.

  3. John Hawley can’t hike tariffs! As we all know, only the PREZIDENT can’t hike tariffs!

    Both the house and senate long ago handed over their power to the PREZIDENT so why would they expect it back now? We are getting an Imperial Biden because they demanded we have an Imperial Trump (and Imperial Barack before him).

    The whole point of the Trumpism is that only the PREZIDENT gets to whimsically fiddle with tariffs. You wanted a king Josh, now you got a king.

    1. You are pathetic

      1. Tarriffs were the end of the world for Brandyfuck last week, but now it’s totes okay because orangemanbad and reasons.

        1. Orange Man bad?!? He BAD, all right! He SOOO BAD, He be GOOD! He be GREAT! He Make America Great Again!

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          https://reason.com/2019/09/02/republicans-choose-trumpism-over-property-rights-and-the-rule-of-law/

          He pussy-grab His creditors in 7 bankruptcies, His illegal sub-human workers ripped off of pay on His building projects, and His “students” in His fake Get-Rich-like-Me realty schools, and so on. So, He has a GREAT record of ripping others off! So SURELY He can rip off other nations, other ethnic groups, etc., in trade wars and border wars, for the benefit of ALL of us!!!

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          1. *Yawn*………….

        2. Brandy is just offended by anything that doesn’t supplicate itself to the global socialist establishment and status quo

  4. Sleepy Joe will save us.

    1. He’s already planning a summit with China and looking forward to his meeting with Chiang Kai-Shek.

      1. Maybe he will get a little Feng Feng while he’s there.

    2. Has Sleepy Joe gotten his COVID19 vaccine yet?

      Why hasnt the MSM pushed him on this?

  5. Two statements in this article struck me:
    Think of the GSP program as a libertarian form of foreign aid.

    and

    “trade expansion induced by greater access to the U.S. market caused a significant acceleration in the growth rates of developing countries.”

    I don’t know what Hawley’s intent is with this bill. I haven’t read it. I don’t much listen to or follow Hawley because on balance, I see much greater threats to the constitutional Union than Hawley.

    But, it’s possible to look at this bill as… not a way to “get China” but perhaps a way to strengthen or… reinvigorate US manufacturing.

    Will his bill work? Don’t know. My gut feeling is that it probably won’t. But given the two statements above, my first response is… our national trade policy should NOT be in the interests of other nations. It should be in the sole interest of the US, full stop.

    If our trade policy is built around helping another nation’s manufacturing and economy, then we’re probably doing it wrong.

    1. To dig into possible reasoning, I don’t know what Hawley’s inbox looks like. But it’s possible… given the two statements from the article I quoted above, that there are small manufacturers who’ve been put out of business because they couldn’t compete with the cheap labor of “country X” who manufactures “product X” that “American company X” used to manufacture locally.

      If the goal of the GSP is to “help country X prosper and grow”, then I could see how Sen. Hawley might have some constituent emails from constituents who might be skeptical of… or take a dim view of the GSP.

      1. Did you read the article? These targeted countries are manufacturing products that are not made here, and the stuff we make isn’t made there. There’s no competition. It’s just politicians disregarding economics because that’s what politicians do.

        1. I did read the article. That’s why I’m asking if the idea was to reinvigorate us manufacturing, so products that “[used to be made here but] aren’t made here now” might return, or… maybe there are people interested in manufacturing those things but simply can’t start them up.

          Again, I was careful to say that I don’t know if Hawley’s bill will be effective, and I’ll repeat, my gut feeling suggests it probably won’t. But there may be more calculated and logical reasoning behind the bill than “Hawley don’t know nuthin’ bout them thar free markets”. Especially when the article itself admits that the GSP is… pretty much straight up in the manufacturing interests of other nations.

          1. But there may be more calculated and logical reasoning behind the bill than “Hawley don’t know nuthin’ bout them thar free markets”.

            I’m sure there is. And I’m sure it’s based upon bad economics, just like protectionism and other idiotic policies that have targeted benefits and dispersed harm.

            1. I wouldn’t place a bet based on your gut instinct. You’re mostly wrong.

        2. To respond directly to your point:

          a think tank housed within Congress, the most common items imported via the GSP program are “travel goods” and “jewelry.”

          Unless American workers are going to start producing handmade Thai jewelry,

          To suggest that America never in its history manufactured hand-made jewelry and travel goods is patently false. It’s possible that there are small manufacturers interested in creating those things but find they can’t compete. Again, I’m merely speculating. It’s entirely possible that Hawley pulled the GSP out of his ass and threw it in his toolset to reinvigorate US manufacturing. But I’m growing skeptical of articles which suggest there’s never any reasoning behind a bill or idea that comes from a politician.

          Someone’s whispering in his ear, the only trick is to find out who.

          Or did you think that California AB-5 was just pulled out of some legislator’s hat?

          1. Nobody said American never made those things. The point is that these other countries can do it more cheaply, and the consumer benefits. Comparative advantage and all that.

            1. I completely agree with you that other countries can produce those things more cheaply, and the consumer benefits. But I think there’s a discussion to be had about employment and prosperity of people along various economic bands.

              All I’m saying is, if America’s GDP is improving, and America moves into a high-skilled labor disposition, engineers, skilled IT people, managers etc., but employment is shrinking everywhere else– and further, the ‘consumer class’ is essentially restricted to those higher-earning economic bands, I’m not opposed to discussing how to address imbalances when entire communities are eviscerated from a job-prospect point of view.

              I understand no one will fix it with ‘just the one thing’. There are regulatory issues, employment regulations, environmental regulations, wage minimums, insurance requirements, safety regulations… all tie together into a Gordian knot that have increasingly made it hard to employ people at the lower end of the band– if not downright hostile to the concept. All I’m saying is it’s not “unlibertarian” to ask questions about policies which might bring a group of marginalized Americans back into the fold, even if it might make consumer goods slightly more expensive– to the upper third of the economic band.

              1. All I’m saying is it’s not “unlibertarian” to ask questions about policies which might bring a group of marginalized Americans back into the fold, even if it might make consumer goods slightly more expensive– to the upper third of the economic band.

                I disagree about that being “unlibertarian.” Do a thought experiment and take that idea to its logical conclusion. Which marginalized Americans do you help? What if the competition is from California, not China? And when you make stuff more expensive you make it more expensive for everyone, not just the upper third. It amounts to a regressive tax to keep people employed who would have otherwise lost their jobs to competition and innovation.

                1. I have done that thought experiment, and there are many conclusions, not just one.

                  For instance, I oppose raising the minimum wage, because it not only lowers employment, but makes things more expensive for those unemployed people– which is the worst of all possible worlds.

                  It’s perfectly reasonable proposition to suggest that a policy might be put into place, however, that admittedly makes things more expensive for people up and down the economic band, but might result in more people across the economic band in having a job.

                  One political faction is primarily interested in or tolerant of the former, and openly hostile to the latter.

                  1. Having a job or doing something productive? You could just use taxes to pay people to dig holes and fill them back up again. Would amount to the same thing.

                    1. Having a job or doing something productive? You could just use taxes to pay people to dig holes and fill them back up again. Would amount to the same thing.

                      Nowhere in my statement to I suggest that we have the CCC create “makework” jobs.

                    2. I know you didn’t. But isn’t it somewhat equivalent? Had your CCC been in existence at the turn of the last century, it might be subsidizing buggy-whip makers.

                  2. If you want people to have jobs, then we need less interference in the economy, not more. For a while I was making my own beer, and I got pretty good at it. Once upon a time I could have opened a tap room and legally sold pints to my neighbors. Today that would get me locked up for a long time. We need more free enterprise. Remove price floors for labor. Remove onerous licensing. Remove asinine regulations that do nothing but increase the cost of entering the market. Let these marginalized people do productive else instead of protecting obsolescence.

                    1. Edit-fail on the last sentence, but I think you know what I mean.

                    2. You’ll get no disagreement from me here, and I alluded to the constellation of regulations that we suffer under now which cause all of those problems at the lower end of the economic scale. But our choices are becoming increasingly narrow. It seems the current plan is “reject Trumpist protection policies” and then watch impotently as “15 Now!”, “Medicare for All”, bans on confederate flags, and massive federal gun control replaces it, while claiming victory for libertarianism.

                    3. I don’t see anyone claiming a victory for libertarianism.

            2. Great, so if the other countries can manufacture the items cheaper they don’t need a tax advantage. They drop their tariffs and we drop ours. Everyone wins. But if they are going to put tariffs on our goods we should respond in kind…isn’t that what fair and free trade is all about?

              1. Tariffs are taxes on consumers, not on foreigners. They don’t pay the taxes. Consumers do. Say another country makes importing stuff from us more expensive for its citizens. That means our government should similarly punish us if we want to buy imports? C’mon, that’s stupid. Unilateral free trade is still better for domestic consumers than responding to tariffs with tariffs.

                1. This is correct, but it’s the definition of “putting your head in the sand” when the other country tariff’s the tar out of your exported goods while suffering under no tarrif’s the other direction. Foreign tariffs on American goods is a tax paid on Domestic Employment. Let that sink in…

                  1. while suffering under no tarrif’s the other direction

                    They don’t pay the tariffs. Consumers do. If you admit that tariffs cause suffering, then you must admit that its the domestic consumers who suffer.

                    Think of it this way. The goal a tariff is to interfere with imports. It’s kinda like a blockade. A blockade, when imposed by another country, is an act of war. Tariffs are like a self-imposed blockade. It’s a government committing an act of war against itself.

                    The purpose of production is consumption. Not employment. If the purpose is employment then lets outlaw robots. Or computers.

                    1. The goal isn’t productivity, it’s prosperity and liberty.

                      What we’re trying to avoid is a highly productive service-based economy, that can only employ highly educated and/or highly skilled/highly paid workers, with high unemployment down the chain, but with cheap consumer goods. That’s not an optimal economic situation and breeds class hostility.

                      It’s not healthy to simply look at GDP and declare #winning because it keeps going up, while you have a growing unemployed or unemployable underclass, but with access to low-cost goods from abroad.

                    2. And in case my point wasn’t clear: A growing unemployable or unemployed underclass who can’t afford the cheap imported goods, because they’re unemployed.

                    3. A growing unemployable or unemployed underclass who can’t afford the cheap imported goods, because they’re unemployed.

                      That’s a problem caused by government giving people shitty educations and then making it difficult for them to get a job. It’s not caused by foreigners making cheaper shoes than New Balance, a company that wouldn’t employ five thousand people if not for protective tariffs. You’ve got a focused and easily seen benefit. New Balance employs people, and they have a voice in the creation of policy. What about the millions who have to pay more for shoes? Where is their voice? I’m sure there are thousands of businesses like New Balance that can’t compete on a level playing field. How many more consumers are getting screwed to protect these jobs?

                      Government makes it hard to get a job, so let’s use government to make stuff more expensive for everyone so we an preserve these jobs because a lobbyist got the attention of a member of Congress!

                      How many wrongs does it take to make a right?

    2. But, it’s possible to look at this bill as… not a way to “get China” but perhaps a way to strengthen or… reinvigorate US manufacturing.

      Did you know that US manufacturing output has never been greater? There’s a shitload of manufacturing going on. What’s down is manufacturing employment. If you want to reinvigorate US manufacturing jobs then you should outlaw automation. Then we can get back to the 50s utopia of mindless, repetitive, assembly line work.

      1. I don’t know if that’s true. It might be… I’d like to see some data on that. I work for a billion dollar manufacturing company that can’t outsource manufacturing fast enough. Everything has been pivoted to India, China, Mexico and a few other tiny nations.

        We are an “American manufacturer” based in America, but all the jobs we provide are high-skilled engineering, design and IT positions. Which is great for engineers, designers and IT people. We provide very few… what some might call ‘working class’ wage jobs. No factory line workers etc. So I don’t know if our company would come under an statistical umbrella of an “American manufacturer operating in the US”.

        Two years ago, our company bought out a factory in Canada, fired everyone and moved the manufacturing to Mexico. Up to that point, that company had been the largest employer in the small Canadian town. Needless to say, the Canadians did not take much solace in the libertarian foreign aid and economic growth that Mexico saw.

        I’m not against free trade, and I don’t have much of an opinion on the GSP because it’s another one of the billions of trade policies the US whose effects are almost impossible to quantify on a case-by-case basis.

        But I don’t pretend that our economic policies (even if good for the concept of free trade) don’t have any economic consequences for people who might exist within certain discreet bands of that economy.

          1. Thank you for the link. There’s a lot of reading there, and I’m sure to agree with a lot of it, but right off the bat, there are things I see that miss the point. But I can’t respond to hose right now. But this was the first thing that popped up that I was talking about before

            My company *might* be included in those statistics. We’re an American Manufacturer. Our output is growing. We are growing as a company. Does that show up in the statistics? If so then those statistics aren’t telling the whole story. All they’re doing is reporting that a manufacturing company, headquartered in the US is increasing production, profits are going up and we’re, in general, doing well. While firing all of our factory workers and sending them to Mexico and China.

            Meaning that while the company itself is doing well, and hiring high skilled local workers, we shrank our employment of people at the lower band of the economic scale.

            If that graph includes companies like mine, then it’s not helpful in determining the employability of Americans across the board.

            1. “Figures don’t lie, but liars figure.” -Mark Twain

              You may be right. It’s not important enough to me to spend a bunch of time digging into it. If you decide to, let me know what you find out.

      2. And yet, unloading trucks at Walmart, the only non-consumable product we ever get that’s actually made in the US is those stupid MyPillows

      1. I’m confused. That read like leftist envy. Was that your intention?

        1. You didn’t read it then.

          1. No dude, I did. And that’s been my point that has been pissing people off for the last who knows how long. You rightists are devolving. You used to respond your brains while the leftists reacted with emotion. What happened?

  6. Although Boehm ran out of space before he could mention it, raising tariffs is also bad for Charles Koch, the billionaire who funds Reason.com.

    Need proof? Here it is — Mr. Koch has lost over $5 billion this year. This is entirely due to Drumpf’s disastrous high-tariff / low-immigration policies. And it also explains why Wall Street, billionaires, and the best Reason writers overwhelmingly backed Biden.

    Fortunately next month we’ll once again have a President who realizes the only legitimate function of government is to create the conditions in which billionaires can get even richer.

    #BillionairesKnowBest
    #GetReadyForTheKochComeback

  7. Why do I get the feeling Boehm is not presenting all of the facts and relevant context?

    1. China’s media censors won’t let him.

      1. Don’t forget Charles. He’s not paying for pie-eyed pieces.

    2. You’re conscious?

  8. Another derpy article that skreech sarc will latch onto in hopes for some relevance here.

    Oh look right above he’s already doubling down on his stupid.

    1. Oh how cute! Another internet tough guy is calling me stupid from behind his keyboard but not addressing anything I actually said! So…. manly! *swoon*

      1. “Another internet tough guy”

        Weren’t you just threatening everyone last week? Or was that just the booze talking?

  9. Since the Dems control the House, is this not just a backbencher trying to score points at home?

    I think this story is too local.

  10. Josh Hawley’s Latest Plan

    Hawley’s latest plan– whatever it is– is a naked authoritarian power grab and an assault on individual liberty.

    Josh Hawley is a latter day Joe McCarthy, and needs to die in a grease fire, or a woodchipper, or a woodchipper while covered in grease and on fire.

  11. The ONLY reason to export is to be able to import. Otherwise we’re just giving stuff away. So anything that impedes imports, such as tariffs, are the height of stupidity.

  12. “Hawley and his staff seem to be “paying a little too much attention to Twitter and not enough attention to the facts,” Patrick Hedger, vice president of policy for the Taxpayers Protection Alliance, a free market nonprofit, tells Reason.”

    This is all they do. They rile up their idiot supporters because they have no actual plans for anything except maybe more tax cuts for the rich.

    Sad thing is it works. Enough idiots to hold us all back sadly.

  13. The Golden Pheasant is also known as The Chinese pheasant. Its wonderful golden colors have nevertheless given it the more common Golden Pheasant name. The bird is not only super beautiful in colors, but also looks nice! They are native to the western coast of China, but they are also bred in certain places. England is the largest breeder of the Golden Pheasant.

    When the male Golden Pheasant wants to attract his friends or a girlfriend, he shows his feathers. Then comes a beautiful orange cape that covers everything except his glittering yellow eyes. What a picture!
    The Golden pheasant

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