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December 22, 2003

One Tariff Down, Many More to Go


President Bush's recent decision to eliminate the steel tariffs couldn't have been easy to make, but it was the correct decision. With the European Union threatening to retaliate and the domestic industries that use steel shedding jobs, something had to be done.

Now, if Congress could just eliminate the other tariffs that are creating such a drag on our economy.

Tariffs are really hidden taxes, and the sooner Congress introduces legislation to eliminate them -- and thwart efforts to impose new ones -- the better. There are virtually endless tariffs on things you'd expect, and on things you couldn't even imagine. All they do is raise prices and the cost of living for the average American.

Whether it's Christmas shopping or just the bare necessities, everyday life would be much cheaper without tariffs. Take orange juice, for example. The United States has a 7 percent tariff on imported juice. The U.S. Trade Representative could eliminate it as a part of the Free Trade Agreement of the Americas , yet the citrus industry and Florida's governor, Republican Jeb Bush, are fighting hard to see that this doesn't happen.

This isn't the only popular tariff in Florida that needs to be eliminated. Take sugar in your coffee? America has a tariff rate quota on imported sugar. As a result, Americans pay two to three times the price the rest of the world pays for sugar, and many products contain the artificially cheap sweetener high fructose corn syrup instead of the real thing.

Unfortunately, protectionism doesn't end with sugar and orange juice. In 2002, the United States implemented a 64 percent tariff on Vietnamese catfish. U.S. producers pressed for it because they resent the competition. They also insisted their Vietnamese counterparts label the fish by its local name, "basa."

Would you like to eat beef instead? American cattlemen have grumbled about trade negotiations with Australia, claiming that our market will be flooded with imports. But Australia doesn't have the capacity to flood our market. The majority of beef imports from Australia become fast-food hamburgers. A trade deal with Australia could make a Whopper or Big Mac even more affordable.

With so many tariffs, you probably won't be surprised to learn they extend even to feeding man's best friend. Yes, Rover could be affected by protectionist government policies. Several members of Congress are seeking to implement a tariff on milk protein concentrates (MPCs), a product produced abroad and used in products ranging from frozen pizza to dog food. Such a tariff could make a long list of products more expensive and could invite a WTO dispute with Australia and New Zealand.

There are trade disputes all around the house. America has a tariff on Canadian lumber, despite the fact that Canada is our partner in the North American Free Trade Agreement. Home ownership is one of the best investments one can make, which is why our government encourages it through tax breaks. So why are we then turning around and raising housing costs by imposing a tariff on Canadian lumber?

Forget about food in your stomach and a roof over your head -- let's concentrate on putting some clothes on your back. Just trying to get dressed elicits more bad news. According to the left-leaning Progressive Policy Institute, while the steel tariffs evoked much emotion, "8 percent to 30 percent tariffs on college sweatshirts, baby jumpers, forks, drinking glasses and underwear elicit mainly blank stares." Because tariffs are invisible taxes, the average American is unaware that all these items cost more than they should.

Thanks to U.S. trade policies, the average American has to spend more just to survive. While the president imposed the steel tariffs, many of these tariffs are the result of congressional action. And more could be on the way. For example, Sen. Charles Grassley, R-Iowa, has introduced legislation to level tariffs on a range of Mexican products. He says the list could include many products that can be found in your kitchen: tomatoes, bell peppers, limes, honey and pecans.

Grassley wants this law because Mexico currently imposes a 20 percent tax on high fructose corn syrup. Officials there are wrong to do so. But starting a trade war with one of our largest trading partners is no way to resolve this. Instead, we ought to work together to eliminate taxes and tariffs on both sides.

Members of Congress ought to understand that a tariff on imported goods translates into higher costs for the American consumer. A politician would never run for office by promising to increase the price of avocados or meat. But by implementing a tariff, they've done just that.

And we all pay the price when they do.

Sara Fitzgerald is a trade analyst in the Center for International Trade and Economics at the Heritage Foundation.

First appeared on Foxnews.com







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