Still trying to explain those tariff increases -

Still trying to explain those tariff increases

The Prime Minister invokes China


The Prime Minister again raised the notion of special deals for China yesterday as an explanation for the government’s decision to increase tariffs.

Mr. Speaker, I am not sure the leader of the Liberal Party understands the issue of tariffs. Let me be clear. The position of the government has been that we have progressively reduced a wide range of tariffs for all Canadians. Canadians have benefited from that to the tune of over half a billion dollars a year.

At the same time, we do not think it is appropriate to have special tariff reductions only for companies from countries like China. The Liberal Party apparently thinks that is appropriate. That is the wrong policy. The right policy is lower tariffs for Canadians and to ensure that Chinese companies pay their fair share.

That leaves only 51 other countries—the 71 other countries that are now subject to higher tariffs, minus the 20 who have trade deals with Canada—to account for.

Two weeks ago, Jim Flaherty suggested that increasing tariffs was about leverage in trade negotiations, but Mike Moffatt notes that Canada is only currently known to be negotiating trade deals with seven of the countries that are now subject to higher tariffs.

It also would seem to remain difficult to square the Harper government’s tariff increases with the Conservative party’s advertising in this regard.

In other news, Canada Border Services Agency has still so far failed to offer an explanation as to how imported iPods might be exempt from tariffs. It has been nearly three weeks since I asked.

See previously: A tax on imported blanketsThe Commons: Ted Menzies challenges everyone to find a tax increase in the budgetA tax on bicycles, baby carriages and iPodsThe Great iPod Tax Crisis of 2013The iPod tax: The finance department respondsWill the Conservatives repeal the iPod tax?Breaking news: Your imported hockey helmet will cost less and Letters from Justin


Still trying to explain those tariff increases

  1. OK, rank in order of improving economic goodness for country A (my ranking noted as a country A consumer):

    1) Two countries A and B both have import tariffs against each others’ production

    2) Country A has import tariffs against country B, but country B has no import tariffs against country A

    3) Country B has import tariffs against country A, but country A has no import tariffs against country B

    4) There are no import tariffs by country A against country B, nor country B against country A.

    Now repeat the exercise if you are a producer located in country A. Different ranking?

    The CPC says to get to 4, you need to both start from 1. Whereas Moffatt, Gordon et al appear to be quite satisfied to stay at 3. Presumably 4 comes by osmosis.

    I’m not sure who is right, tho. Perhaps someone who has actual trade negotiating experience may offer an informed opinion.

    • Bingo, you really hit the nail on the header there.

      But if you think that Wherry or Moffatt are writing opinions based on what’s good for Canada, you’re wrong. They only care about advancing Liberal Party talking points. You can tell who these partisans are, because they can’t answer the simple question “Why should Chinese manufacturers be subsised by Canadian taxpayers?”, hell, they won’t even attempt to answer it.

      • Is Harper for or against free trade with China?

        • I don’t know. I would guess “for”. But I’m guessing you still don’t understand the difference between a bilateral trade agreement and unilaterally giving one country a tariff discount, just because.

  2. 4 Boneheaded Biases Of Stupid Voters:

    A shrewd businessman I know has long thought that everything wrong in the American economy could be solved with two expedients: 1) a naval blockade of Japan, and 2) a Berlin Wall at the Mexican border.

    Like most noneconomists, he suffers from anti-foreign bias, a tendency to underestimate the economic benefits of interaction with foreigners. Popular metaphors equate international trade with racing and warfare, so you might say that anti-foreign views are embedded in our language. Perhaps foreigners are sneakier, craftier, or greedier. Whatever the reason, they supposedly have a special power to exploit us.

    There is probably no other popular opinion that economists have found so enduringly objectionable. In The Wealth of Nations, Adam Smith admonishes his countrymen: “What is prudence in the conduct of every private family, can scarce be folly in a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry.”

    It is misleading to think of “foreignness” as a simple either/or. From the viewpoint of the typical American, Canadians are less foreign than the British, who are in turn less foreign than the Japanese. From 1983 to 1987, 28 percent of Americans in the National Opinion Research Center’s General Social Survey admitted they disliked Japan, but only 8 percent disliked England, and a scant 3 percent disliked Canada.

  3. “The right policy is lower tariffs for Canadians and to ensure that Chinese companies pay their fair share.”…

    ….with a little help from the consumer, and or slimmer profit margins or deminishing sales for the importing Canadian businesses, right!

    There being no free lunch. No magical way to make those Chinese exporters bear all the costs, right Mr H?

    • If China was keeping the RmB artificially low, would you support them raising it, or allowing the currency to float, recognizing it may effectively raise the cost of your consumer goods (maybe far more so than these tariffs)?

      • Wouldn’t that be something outside of our control? Raising our tariffs is most certainly something within our control.

        • True. But it puts all the brouhaha it into perspective.

          Fair traders should also advocate unmanipulated currencies, IMO.

          • That’s a little outside of my payscale to judge. I would say i think there’s no such thing as a truly free market though.