The Trump Administration Should Focus on Deregulation, Not Tariffs
President Donald Trump’s justifications for tariffs keep shifting—one moment they’re to cut the flow of illegal drugs and immigrants, the next, they’re to bolster American businesses and jobs. But the argument that seems to resonate most with the public is that they will result in a stronger and more competitive U.S. economy. Economists aren’t convinced, to put it mildly. The fact is that American government is often the biggest impediment to the workers and employers that politicians claim to be helping.
“Large and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base [and] resulted in a lack of incentive to increase advanced domestic manufacturing capacity,” Trump argued in an April 2 executive order imposing stiff tariffs on most of the planet. “President Trump is working to level the playing field for American businesses and workers by confronting the unfair tariff disparities and non-tariff barriers imposed by other countries.”
Barriers To Trade Come From Our Own Government
But what if the most insurmountable barriers for domestic businesses and the jobs they create come not from foreign governments but from homegrown regulators trying to mold the economy into their preferred form? In fact, entrepreneurs and executives at established firms complain bitterly about the costs of pleasing elected officials and government employees who create red tape instead of prosperity.
“Considering all federal regulations, all sectors of the U.S. economy and all firm sizes, federal regulations cost an estimated $12,800 per employee per year in 2022 (in 2023 dollars). Small firms with fewer than 50 employees incur regulatory costs of $14,700 per employee per year – 20% greater than the cost per employee in large firms ($12,200),” according to a 2023 study commissioned by the National Association of Manufacturers (NAM) as a continuation of earlier work by the authors for the U.S. Small Business Administration’s Office of Advocacy.
That’s bad enough. But if you’re concerned about domestic manufacturing, you should know that the situation is even tougher for companies that make things: “The regulatory cost disadvantage confronting small firms is amplified greatly in the manufacturing sector, with small manufacturing firms bearing more than double the cost of large manufactu
Article from Reason.com
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