The International Trade Commission’s latest report on the economic effects of significant U.S. import restraints estimates that liberalization of all such measures would increase annual U.S. welfare by $3.3 billion by 2020.
The ITC’s report estimates changes in U.S. welfare, output, employment, and trade that would result from the unilateral elimination of significant import restraints, including U.S. tariffs and tariff-rate quotas on certain agricultural products, textiles and apparel, and other manufactured products. It also examines the effects of import restraints on households with different incomes as well as the effect of tariffs and customs and border procedures on global supply chains.
The ITC states that removing significant import restraints would have both positive and negative effects. It would lower the cost of goods to consumers and the cost of inputs for U.S. industries. On the other hand, easing restrictions would increase the quantity of imports and thus lower their costs, forcing U.S. producers of similar products to reduce their prices, which could cause some to go out of business.
Key findings of the ITC report include the following.
- The largest welfare increases from the removal of significant import restraints would be $2.4 billion in the textile and apparel sector, $342.7 million for sugar, $320.2 million for leather and allied products, and $100.8 million for other pressed and blown glass and glassware.
- Exports in most liberalized sectors would increase, except for a fairly large decrease in yarn, thread, and fabric exports due to the effect of certain U.S. free trade agreements.
- A typical annual household consumption basket would cost from $54 to $288 less each year if significant import restraints were removed; higher income groups would benefit more in dollar terms because they spend more.
- The world average cumulative tariff (the sum of direct tariffs (those imposed on a good that crosses a border) and indirect tariffs (those previously imposed on an upstream input when it crossed a border earlier in the process)) is about 2.9 percent, including 2.4 percent direct tariffs and 0.5 percent indirect tariffs.