Over the past few decades, America has seen it’s trade deficit and tax revenue shortfall expand exponentially. In short, we are addicted to low cost goods and oil, and don’t have the money to pay for necessary social programs, roads, wars, education, and medical treatment.
We need to understand that all goods imported into this country have a social cost, like goods that are made here. Goods made in the U.S. are subject to taxes, work rules, environmental rules, and so on. Eventually, all goods need to be disposed of, or cleaned up, often at public cost.
Imported goods don’t pay for education, medical insurance, social security, roads, wars, environmental clean up, and so on.
We need to have tariffs that reflect that cost. Maybe a formula would be to look at our Gross Domestic Product (GDP), our total cost of government (COG), divide the GDP/COG and come up with a percentage. Simply stated, if the GDP is $14 trillion and the COG $1.4 trillion, the tariff on imported goods would be 10% across the board. Imported oil would have this tariff added to the already imposed state and federal taxes.
Approximately $2 trillion worth of goods are imported into our country on an annual basis, meaning the social cost would be $200 billion, no small piece of change.
An additional benefit would be to balance the playing field between domestic and imported goods by balancing the cost of doing business. I don’t blame businesses going to where they can be most efficient and competitive; that is their job. If the U.S. is the most competitive place to manufacture, producers will make their products here.
Yes, imported goods would go up in price, and almost everything we buy has some import element to it. But, if we’re looking at a “flat” world, our policies need to reflect the real cost of doing business, no matter where products are manufactured.