Trade Barriers Are Costly For American Consumers
TARIFFS and quantitative resrictions on imports cost United States consumers about $70 billion in 1990. That's the finding of a study by economists Gary Hufbauer and Kimberly Elliot for the Institute for International Economics in Washington.
This cost to the consumer, amounting to more than 1 percent of gross domestic product, is not as severe for the nation as a whole. That's because the government gains from tariff revenues. Also, domestic producers of protected goods are able to charge more for those goods. The net national welfare loss works out to almost $11 billion, the two authors calculate. Nearly two-thirds of that total was captured by foreign producers through the higher prices they can charge when their goods are subject to US import quotas.
For the whole economy, some $38 billion of the cost to consumers stems from ``normal'' low tariffs, averaging 3.5 percent on 60 percent of all imports. The other $32 billion was accounted for by ``special'' protective measures consisting of tariffs 9 percent or above and quantitative restrictions. Textile and apparel quotas alone cost consumers $24 billion in 1990.
When fully implemented, trade liberalization from the Uruguay Round will reduce consumer costs of trade barriers by almost one-half, the study estimates.