As speculation continues on what the trade policy of President-elect Biden will look like, a recent report from the Heritage Foundation recommends that the U.S. eliminate tariffs on imports of manufactured goods, remove the additional tariffs that have been imposed since 2018, and renew tariff preferences. These actions, the report asserts, would increase U.S. exports and GDP, create more and higher-paying domestic jobs, and reduce prices paid by consumers.
The report states that while the average U.S. tariff on imports of manufactured goods is only 1.1 percent, changes that could be expected within a year of removing these tariffs include the following.
- prices of imported manufactured goods decrease by more than two percent, which would allow companies that use such goods to increase production
- imports of manufactured goods increase by almost 4.5 percent but imports in other sectors decrease by an average of less than 0.5 percent
- exports increase in all sectors, including nearly three percent for manufactured goods, two percent in extraction (forestry, oil, gas, etc.), and one percent in textiles and services
- some job losses in manufacturing but job increases in other, often higher-paying sectors
The report also calls on Congress and the White House to remove the Section 232, Section 301, and other additional tariffs the U.S. has imposed since 2018, which “act as a sales tax on American families and businesses that buy products or inputs from abroad” and have cost them $70 billion so far. These tariffs could be removed by executive order or by Congress amending the statutes used to implement them.
Finally, the report urges the extension of the Generalized System of Preferences and the miscellaneous tariff bill past their current December 2020 expiration given that they suspend tariffs on thousands of imported goods.
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