Caught in trade war crossfire

Producers who think they will benefit if overseas competitors are shut out of their domestic market or face high tariffs aren’t looking at the whole picture as Mexican dairy farmer Georgina Gutierrez explains:

Obrador, for example, talks about the importance of self-sufficiency, suggesting that our country can produce everything it consumes. 

This idea holds a certain kind of appeal, at least on the surface. Consider my own case as a good example.  I’m a dairy farmer. If our government were to stop importing milk, in the name of self-sufficiency, it would reduce the competition that I face from foreign producers and, presumably, allow me to flourish.  

Yet in reality, we’d all suffer. Mexican dairy farmers don’t produce enough milk to meet the demands of consumers. Even if we did, we still wouldn’t be truly self-sufficient. Milk production doesn’t take just a dairy farmer with a bunch of cows—it also requires farmers who grow the food that dairy cows eat as well as technology and machinery that make us better producers. Mexico imports these goods as well.  

In fact, my farm wouldn’t exist in its present state but for our ability to exchange goods and services across borders. We import corn, soy, canola, vitamins, medicine, and machinery, for example. This is how sustainable economies work, keeping prices in check for everyone. And it’s much better than the protectionism, price controls, and subsidies that central planners wrongly believe will fix the problems of their own market distortions.  . . 

In trade wars, producers and consumers get caught in the crossfire and pay the price with higher prices and less choice.

The only ones who win are the politicians and bureaucrats and even that’s usually only in the short-term.

Once economic growth slows as an inevitable consequence of higher prices, voters usually tire of the politicians responsible for it.

For more on this, see Daniel Ikensom who writes that Trump’s trade wars are incoherent, angry and misguided. (Hat tip: Kiwiblog

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