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Real Talk About Tariffs

An open letter to Florida’s Congressional delegation

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At first blush, the imposition of tariffs on China may not appear to significantly impact Florida. However, in retaliation, China has initiated a trade war imposing import tariffs on our goods, which will have a very dire effect on our state. Florida has 15 major ports that deal in international commerce, employing more than 1.8 million Floridians. We have 12 international airports employing tens of thousands of workers. Almost 300,000 Florida jobs are supported directly by exports alone. Annually, more than $143 billion in international commerce runs through Florida's transportation hubs, more than $33 billion in metropolitan Miami alone. Our state exports more than $60 billion a year in goods; agricultural products accounting for $3.6 billion, which is nearly 40 percent of Florida's total agricultural production and now being targeted by China for retaliatory tariff restrictions. If international trade is compromised by imposing tariffs, Florida's agricultural sector will be devastated, as will other important sectors of our economy. Florida employment will suffer substantially.

As I'm sure you understand, a trade deficit does not cost American jobs. Those jobs have already been lost and that should be dealt with as discussed below. A trade deficit is also not, as President Trump has described it, something that causes us to "lose" the dollar amount of the deficit. Put simply as a vignette, if my mother decides she would like to buy a vase from a neighbor across the street and pays $50 for that vase, she does not "lose" $50. In fact, she received something that she believes is of higher value than $50 or she would not have purchased it. And if she had gone to the store and paid $75 for that vase, she would have 25 fewer dollars to make another purchase, thus reducing her income. Did her trade deficit with her neighbor really hurt her in any way? In fact, she gained $25 of income by not buying it in a store, and bought a vase worth more than $50 to her.

Likewise, when we run a trade deficit of $60 billion with Mexico, we receive more than $60 billion in goods that we have chosen to purchase. By not purchasing goods produced domestically, we have added to our national income. In this case, the government is saying it doesn't care what we choose to do. Our government is telling us that we cannot buy those goods at the price we want to pay. In a free country, the government can't forbid it, so it just makes it more costly and sends our money to the federal treasury through a tariff, i.e., the added cost is a tax increase.

More important, the job losses that accrue through these trade transactions should be addressed directly by creating programs and systems to effectively assist displaced workers. Those programs can be painlessly paid for by sharing the economic benefits of international trade and putting displaced workers back into the labor market through training and financial assistance. We currently have no effective program to do that. Using the example above, why not take a small portion of that $25 my mother saved and use it to help the vase makers who lost their jobs? By splitting the savings, Mom receives $12.50 in income and the displaced workers receive $12.50 in assistance. Win-Win.

Our nation saves (read: receives income of) more than $1.5 trillion a year by purchasing imported goods. Why impose a tariff to prevent potential future job losses and forsake that income when we should be using a portion of that income to help those who have already lost their jobs, by helping them re-enter the labor market? On top of that, why reduce our national income by more than a trillion dollars a year?

If this seems absurdly simple, please realize it is. The president's obsession with trade deficits is very badly flawed. Imposing tariffs and starting a trade war is a misguided policy that will only cause harm-especially for the state of Florida. It's the job of our representatives in Congress to address this issue, regardless of political party or the political repercussions of such advocacy.

I personally prepared and presented a Special Report detailing how to resolve these issues to Congressional offices last April. The proposed system has been vetted by thought leaders on the topic, including the Cato Institute and the U.S. Department of Labor. I would be happy to visit again to discuss the use of the legislative proposal to counter the administration's perceived need for tariffs and bringing displaced workers back into the labor market. This action is necessary to protect the Florida economy and your constituents.

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O’Brien is the CEO of Vista Energy Group and a professor of public administration at Flagler College.

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