Agricultural Economics Department
Cornhusker Economics
Date of this Version
10-2-2024
Document Type
Newsletter Issue
Citation
Cornhusker Economics (October 2, 2024)
Agricultural Economics, University of Nebraska-Lincoln
Abstract
Summary
The takeaway from this article should be that tariffs are a political tool, not an economic one. They do raise prices and revenue, but not as much as advertised (by either side).
At its core, Economics is the study of how scarcity is solved. That is, how limited resources are best utilized. Time and time again, Adam Smith’s idea that the invisible hand of markets would guide us to welfare-maximizing solutions, largely through specialization and trade. It’s why most of us specialize in one career and trade our hard-earned money for goods and services instead of producing them at home. Domestic taxes undermine this to some extent, but the tradeoff is necessary, and the amount of taxes levied would never halt domestic trade.
Trade wars and debilitating tariff rates could escalate until all trade is eliminated. While the economy of the United States is an extraordinary machine, the ability to trade for coffee, tea, maple syrup, or semiconductors increases our collective standard of living.
At the beginning of this article, it was mentioned that I enjoyed the opportunity to teach without my personal biases interfering with a student’s ability to learn. By this point, my bias should be clear; our politicians should craft policies aimed at working with global trading partners instead of against them. These policies may be difficult to create, but for the benefit of all Americans, they are worth the effort.
Included in
Agricultural Economics Commons, Taxation Commons, Taxation-Federal Commons, Taxation-Transnational Commons