Last October I wrote about the tariffs being imposed on glass and a multitude of other products and how those tariffs were assessed and paid. I presented them as evil terrible things. Ironically, yet another round of tariffs is being proposed that this time will be levied against imported olive oil. This is a huge boon to The Olive Oil Source as we have always focused on selling Californian olive oil. Now those lower priced imports we have had so much trouble competing against are going to get more expensive, possibly a lot more expensive. Does that make me a supporter of tariffs? Not at all and here are some reasons why.
The most fundamental reason is that I believe very strongly in conservative economic policy and tariffs are anathema to that. Contrary to President Trump’s claim on 5/5/19 that, “For 10 months China has been paying tariffs to the U.S.” (Reuters), the exporting country doesn’t pay the tariffs, the consumer does. Then there was his claim on 5/13, “If you look at the first quarter (referring to G.D.P.)…we were at 3.2% (growth)…. Well, a lot of that was the tariffs that we were taking in from China” (Factcheck.org). Once again, Americans pay the tariffs and taxes don’t get counted in G.D.P. While these new olive oil tariffs will not be levied against China, they will be implemented in exactly the same way and it is nothing more than a hidden tax on the end user.
In addition to increasing taxes on consumers, tariffs beget tariffs. Despite numerous claims over the last three years about how trade wars are easy to win, this would be the first time. Trade wars tend to just drag on and on with each country introducing retaliatory tariffs that just build upon each other. We are seeing it now with China and the E.U. is sure to follow suit. In addition to my strong belief in the virtues of conservative economic policy, there are more down to earth concerns about this too.
We are trying to build an olive oil industry in California and for that matter across the U.S. If our domestic producers are competing against artificially inflated prices due to tariffs, there is no economic incentive to be globally competitive and we will never develop the efficiencies required to compete throughout the world. One of our biggest problems in achieving the needed efficiencies is the high cost of labor and farming in general in the U.S. relative to the rest of the world. Our domestic industry needs to be forced to create efficiencies in tandem with an exemplary track record for quality and honesty in labeling if we are going to make it. For this reason, we need a competitive free market, something conservative economists and politicians have been working to develop and sustain for decades and in direct contradiction with tariffs.
July 14, 2019