Complicated trade issues made simple in Seymour, Ind., home of the last remaining American factory making the basic ironing board. Facing devastating competition from China, the company improved efficiency, automated what it could and got to the point where it could produce the basic unit for $7. But China could do them for $5. So the company sought and received tariffs that kept the Chinese boards off the market. But the basic question: Is this really good policy?
"It doesn't make much sense to force millions of U.S. consumers to pay higher prices for ironing boards to save 200 jobs," said Howard Rosen, an economist at the Peterson Institute who has organized efforts to get retraining programs for workers displaced by the offshoring of jobs. "It would make more sense to help workers move to other jobs."
Tariffs also invite retaliation, which could slow trade to the point where everybody loses. Here's Thomas Sowell on what tariffs did in the 1930s.
Although the big stock market crash occurred in October 1929, unemployment never reached double digits in any of the next 12 months after that crash. Unemployment peaked at 9 percent, two months after the stock market crashed— and then began drifting generally downward over the next six months, falling to 6.3 percent by June 1930.
This was what happened in the market, before the federal government decided to "do something."
What the government decided to do in June 1930— against the advice of literally a thousand economists, who took out newspaper ads warning against it— was impose higher tariffs, in order to save American jobs by reducing imported goods.
This was the first massive federal intervention to rescue the economy, under President Herbert Hoover, who took pride in being the first President of the United States to intervene to try to get the economy out of an economic downturn.
Within six months after this government intervention, unemployment shot up into double digits— and stayed in double digits in every month throughout the entire remainder of the decade of the 1930s, as the Roosevelt administration expanded federal intervention far beyond what Hoover had started.