The BDN Opinion section operates independently and does not set news policies or contribute to reporting or editing articles elsewhere in the newspaper or on bangordailynews.com
Andrew Rudman is a senior associate in the Americas Program at the Center for Strategic and International Studies in Washington, D.C. Previous positions include director of the Mexico Institute at the Woodrow Wilson International Center for Scholars and director of the Office of NAFTA and Inter-American Affairs at the Commerce Department. He is a Bangor native and a graduate of Colby College in Waterville.
In a recent Washington Post interview, Rep. Jared Golden of Maine’s 2nd Congressional District questioned the need for year-round access to avocados and wondered if omega-3s could be obtained through consumption of fish or other American-harvested food.
With the New England Patriots’ season over, Mainers may be less inclined to make guacamole for this month’s Super Bowl. Golden was speaking not about football, however, but about his recently introduced Balance Unequal International Labor and Trade for the United States of America Act, or BUILT USA Act. The act proposes a 10 percent tariff on the import of all goods and services into the United States, including avocados. Consumer access to avocados may be more want than need, but BUILT USA extends far beyond Super Bowl snack ingredients.
U.S. consumer demand exceeds domestic production of avocados and for many other commodities, such as bananas, coffee and coconuts. Some of these products are not produced in the United States at all. While some consumers may find substitutes such as the proposed fish for avocados, most coffee drinkers, me included, would be loath to see an increase in the price of their morning cup.
Though access to the above food items may seem trivial, the U.S. depends on foreign production for a number of essential products and will be for some time. These include critical and rare earth minerals, medicines and medical devices. Reducing U.S. dependence, while desirable, cannot occur overnight.
For example, the U.S. depends on China and India for an important share of medicines (particularly generics which account for 90 percent of all prescriptions). Construction of new manufacturing facilities for these products would take several years even if regulatory requirements were lifted. In the interim, prices would rise.
Over the past three decades, the North America auto industry has become fully integrated with partially completed vehicles and parts crossing the U.S.-Canada and U.S.-Mexico borders multiple times during production. A blanket tariff on parts produced outside the U.S. will lead to increases in the cost of automobiles, even those “made in the USA.” Developing entirely domestic supply chains would take time and likely further erode the industry’s global competitiveness. Firms in most other sectors would face the same challenges in attempting to source exclusively from domestic suppliers.
Proponents of increased tariffs frequently claim that they would generate additional federal revenue. This argument ignores two key points. First, tariffs are regressive in nature. The 10 percent tariff on all goods will fall disproportionately on lower-income families who spend a larger share of their income on goods for immediate consumption. Second, tariffs are paid by the importer, not the exporter as many claim. While the importer may choose not to pass along the full cost to the final consumer, the tariff increases the cost of production and will necessarily impact the firm’s bottom line.
Furthermore, the promise of increased revenue assumes that U.S. firms will continue to import items in contradiction to the desired objective of encouraging domestic production. Either the tariffs lead to increased domestic production (likely at higher cost) or they increase revenue; they cannot simultaneously do both.
The blanket tariffs also assume that our trade partners will not retaliate. The leaders of our two largest trading partners, Mexican President Claudi Sheinbaum and Canadian Prime Minister Justin Trudeau, have made clear that they will. Retaliatory tariffs are generally applied to products for which there are alternative suppliers. Imposition of retaliatory tariffs by Europe on, for example, lobsters or blueberries, would increase the competitiveness of Canadian exports of these products in comparison with Maine’s.
U.S. dependence on some foreign-sourced goods poses long-term national security risks. Application of targeted tariffs to encourage increased production of critical products such as semiconductors, critical minerals and pharmaceuticals, combined with additional incentives and purchase commitments may be worthwhile. Increasing prices on all imports, whether there are U.S. alternatives or not, will not reduce that dependence.
