American Manufacturers Need Tax and Regulatory Reform, Not Tariffs
With more tariffs on electric vehicles and an election featuring two pro-tariff presidential candidates on the way, the debate about how best to support and strengthen the U.S. manufacturing sector is back. Some argue, mistakenly, that the key to protecting American industries and manufacturing jobs is a set of tariffs on industrial imports. This approach is ultimately counterproductive. There are better ways to help American manufacturing, not the least of which is to remove regulatory barriers and reform the tax code.
U.S. tariffs—taxes on Americans’ purchases of imports—are touted as a means of “leveling the playing field” by protecting domestic manufacturers from foreign competition. But this view overlooks the fact that tariffs raise costs not only for consumers but also for American businesses that use imports as inputs. Further, tariffs disrupt supply chains and cause trading partners to impose retaliatory tariffs on our exports.
Even more significantly, tariffs do little to address the underlying factors that make it difficult for U.S. manufacturers to compete in the global marketplace. Instead, manufacturers need a more favorable regulatory and tax environment. It should be obvious that excessive regulations place significant burdens on businesses, increasing compliance costs, stifling innovation, and making it harder for companies to adapt to changing market conditions.
And boy, does manufacturing suffer from excessive regulations. From environmental regulations like the National Environmental Policy Act to labor regulations like the Occupational Safety and Health Act to consumer protection and product safety regulations to financial and accounting regulations like the Sarbanes-Oxley Act, manufacturers in America face an unnecessarily onerous burden.
In a recent paper titled “Industrial Headwinds: Reducing the Burden of Regulations on U.S. Manufacturers,” published in the May 2024 Club for Growth Policy Handbook, economist Daniel Ikenson writes, “For manufacturing firms, the cost of federal regulations in 20
Article from Latest
The Reason Magazine website is a go-to destination for libertarians seeking cogent analysis, investigative reporting, and thought-provoking commentary. Championing the principles of individual freedom, limited government, and free markets, the site offers a diverse range of articles, videos, and podcasts that challenge conventional wisdom and advocate for libertarian solutions. Whether you’re interested in politics, culture, or technology, Reason provides a unique lens that prioritizes liberty and rational discourse. It’s an essential resource for those who value critical thinking and nuanced debate in the pursuit of a freer society.