Tariff: Difference between revisions
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''' | A '''tariff''', also called a customs duty, is a [[tax]] on [[good]]s crossing a national border, in practice almost always on imports and collected by the importing country's government. | ||
Austrians treat the tariff as an ordinary case of [[interventionism]] rather than a special branch of policy. It is a tax, it falls on the buyer, and like any other restriction on [[production]] it makes the community poorer in order to make a particular group richer. | |||
==Who pays== | |||
The tariff is defended as a charge on foreigners. It is not. The importer pays the duty and passes as much of it as the market will bear into the price, so it is domestic buyers who meet the cost, either in money or by going without. Domestic producers of the protected good can then raise their own prices toward the new level, which is the point of the exercise. | |||
The result is a transfer from a country's own consumers to a favoured domestic industry, with a portion collected by the treasury and a further portion simply destroyed, since some exchanges that both parties wanted no longer happen at all. | |||
==The seen and the unseen== | |||
The political durability of tariffs comes from the shape of the costs rather than their size. The jobs preserved in the protected industry are concentrated, identifiable, and photogenic. The costs are spread across every buyer of the good, and across the industries that would have grown had that money been spent elsewhere. Nobody can name the firms that were never founded. | |||
[[Frédéric Bastiat]] built his best-known satire on this asymmetry, in which the candlemakers petition for protection from the ruinous competition of the sun. [[Henry Hazlitt]] made the general form of the argument the organising principle of ''[[Economics in One Lesson]]'': the bad economist sees only what is immediately visible, the good one traces what follows.<ref name="hazlitt">[[Henry Hazlitt]]. [https://freecapitalists.org/books/economics-in-one-lesson/ ''Economics in One Lesson''].</ref> | |||
==Exports pay for imports== | |||
A tariff aimed at reducing imports reduces exports too. Foreigners acquire the currency to buy a country's goods by selling it theirs; block the selling and the buying loses its means. [[Ludwig von Mises]] treated protection under the general heading of restriction of production, whose defining feature is that it makes people worse off in the aggregate and is adopted because the loss is not traced to it.<ref name="ha29">[[Ludwig von Mises]]. [https://freecapitalists.org/books/human-action/read/chapter-xxix-restriction-of-production/ XXIX. Restriction of Production], ''[[Human Action]]''.</ref> | |||
This is also why tariffs tend to spread. Protecting steel raises costs for everyone who uses steel, who then have a case for protection of their own. | |||
==The arguments that are taken seriously== | |||
Austrians do not treat every protectionist argument as frivolous, though they reject each in the end. | |||
* The '''infant industry''' argument holds that a new industry needs shelter until it reaches efficient scale. The Austrian reply is that if the industry will eventually pay, its future earnings are a reason for investors to fund it now, and that shelter removes the pressure to become efficient rather than supplying it. | |||
* The '''national defence''' argument holds that some capacity must exist domestically whatever it costs. This is conceded as a claim about strategy rather than economics, and the reply is that it is invoked far beyond any plausible military need. | |||
* The '''revenue''' argument is the oldest and the most honest, since a tariff was the simplest tax to collect before income taxation. It is an argument for a low uniform duty, not for protection, which works precisely by ''not'' raising revenue on the trade it prevents. | |||
==Tariffs in American history== | |||
The tariff was the principal federal revenue source for most of the nineteenth century and a persistent sectional grievance, since it protected northern manufacturing while raising costs for southern and western buyers of manufactured goods. [[Thomas DiLorenzo]] has argued that this made it a substantial cause of the sectional conflict, a reading disputed by historians who treat slavery as the overwhelming cause. F. W. Taussig's ''The Tariff History of the United States'' remains the standard narrative account.<ref name="taussig">F. W. Taussig. [https://freecapitalists.org/books/tariff-history-of-the-united-states/ ''The Tariff History of the United States''].</ref> | |||
==See also== | |||
* [[Free trade]] | |||
* [[Tax]] | |||
* [[Interventionism]] | |||
* [[Comparative advantage]] | |||
* [[Mercantilism]] | |||
==References== | ==References== | ||
{{ | {{reflist}} | ||
==Links== | ==Links== | ||
* [ | * [https://mises.freecapitalists.org/daily/2644 How the Shrimp Tariff Backfired] by Aleksandra Dunaeva and Don Mathews, August 2007 | ||
* [ | * [https://mises.freecapitalists.org/daily/1388 Some Subtler Arguments for Tariffs] by Robert P. Murphy, December 2003 | ||
* [ | * [https://mises.freecapitalists.org/daily/952 Lincoln's Tariff War] by Thomas J. DiLorenzo, May 2002 | ||
* [https://mises.freecapitalists.org/daily/5008 Once-Temporary Tariff] by F.W. Taussig (from [https://freecapitalists.org/books/tariff-history-of-the-united-states/ The Tariff History of the United States]) | |||
* [ | * [https://freecapitalists.org/books/the-tariff-idea/ The Tariff Idea] by W. M. Curtiss, February 1953 | ||
* [https://mises.freecapitalists.org/daily/2086 Henry George and the Tariff Question] by Karen De Coster, April 2006 | |||
* [ | * [https://freecapitalists.org/books/protection-or-free-trade-an-examination-of-the-tariff-question-with-especial-regard-to-the-interests-of-labor/ Protection or Free Trade] by Henry George, 1886 | ||
* [ | |||
* [ | |||
* {{wplink}} | * {{wplink}} | ||
[[Category: Concepts]] | [[Category:Concepts]] | ||
Latest revision as of 13:10, 16 August 2026
A tariff, also called a customs duty, is a tax on goods crossing a national border, in practice almost always on imports and collected by the importing country's government.
Austrians treat the tariff as an ordinary case of interventionism rather than a special branch of policy. It is a tax, it falls on the buyer, and like any other restriction on production it makes the community poorer in order to make a particular group richer.
Who pays
The tariff is defended as a charge on foreigners. It is not. The importer pays the duty and passes as much of it as the market will bear into the price, so it is domestic buyers who meet the cost, either in money or by going without. Domestic producers of the protected good can then raise their own prices toward the new level, which is the point of the exercise.
The result is a transfer from a country's own consumers to a favoured domestic industry, with a portion collected by the treasury and a further portion simply destroyed, since some exchanges that both parties wanted no longer happen at all.
The seen and the unseen
The political durability of tariffs comes from the shape of the costs rather than their size. The jobs preserved in the protected industry are concentrated, identifiable, and photogenic. The costs are spread across every buyer of the good, and across the industries that would have grown had that money been spent elsewhere. Nobody can name the firms that were never founded.
Frédéric Bastiat built his best-known satire on this asymmetry, in which the candlemakers petition for protection from the ruinous competition of the sun. Henry Hazlitt made the general form of the argument the organising principle of Economics in One Lesson: the bad economist sees only what is immediately visible, the good one traces what follows.[1]
Exports pay for imports
A tariff aimed at reducing imports reduces exports too. Foreigners acquire the currency to buy a country's goods by selling it theirs; block the selling and the buying loses its means. Ludwig von Mises treated protection under the general heading of restriction of production, whose defining feature is that it makes people worse off in the aggregate and is adopted because the loss is not traced to it.[2]
This is also why tariffs tend to spread. Protecting steel raises costs for everyone who uses steel, who then have a case for protection of their own.
The arguments that are taken seriously
Austrians do not treat every protectionist argument as frivolous, though they reject each in the end.
- The infant industry argument holds that a new industry needs shelter until it reaches efficient scale. The Austrian reply is that if the industry will eventually pay, its future earnings are a reason for investors to fund it now, and that shelter removes the pressure to become efficient rather than supplying it.
- The national defence argument holds that some capacity must exist domestically whatever it costs. This is conceded as a claim about strategy rather than economics, and the reply is that it is invoked far beyond any plausible military need.
- The revenue argument is the oldest and the most honest, since a tariff was the simplest tax to collect before income taxation. It is an argument for a low uniform duty, not for protection, which works precisely by not raising revenue on the trade it prevents.
Tariffs in American history
The tariff was the principal federal revenue source for most of the nineteenth century and a persistent sectional grievance, since it protected northern manufacturing while raising costs for southern and western buyers of manufactured goods. Thomas DiLorenzo has argued that this made it a substantial cause of the sectional conflict, a reading disputed by historians who treat slavery as the overwhelming cause. F. W. Taussig's The Tariff History of the United States remains the standard narrative account.[3]
See also
References
Links
- How the Shrimp Tariff Backfired by Aleksandra Dunaeva and Don Mathews, August 2007
- Some Subtler Arguments for Tariffs by Robert P. Murphy, December 2003
- Lincoln's Tariff War by Thomas J. DiLorenzo, May 2002
- Once-Temporary Tariff by F.W. Taussig (from The Tariff History of the United States)
- The Tariff Idea by W. M. Curtiss, February 1953
- Henry George and the Tariff Question by Karen De Coster, April 2006
- Protection or Free Trade by Henry George, 1886
- Tariff at Wikipedia