Foreign-Trade Zones were key to auto recovery. "Like many other industries, automakers in the United States face the problem of “inverted tariffs.” While finished automobiles can be imported to the United States at the relatively low tariff of 2.5 percent, tariffs are significantly higher on a number of major component parts needed to manufacture and assemble a showroom-ready automobile…The FTZ program puts U.S.-based auto plants on an equal footing with foreign producers by allowing them to source components internationally without paying the higher tariffs. If the finished automobile enters U.S. commerce, the tariff is charged at the lower 2.5 percent rate. But if the finished product is exported for sale abroad, no tariff is due. This provision has given a strong and positive stimulus to U.S. auto exports." Daniel Griswold in The Tennessean.
Republican Debate Over Tariff Bill Obscures the Bigger Picture. "The MTB gives manufacturers a sugar buzz, but to provide the protein that would help them build muscle and possibly fulfill the president’s claims, duty suspensions must be made permanent and applied across the board to all products…According to the Bureau of Economic Analysis, capital equipment and intermediate goods – items purchased by the very manufacturers referenced in the president’s remarks – accounted for 58 percent of the $2.2 trillion worth of U.S. goods imports in 2011. The $32 billion in taxes collected by Customs on those imports represent real costs that handicap U.S. producers, raise U.S. living expenses, and deter investment and hiring." Dan Ikenson in Forbes.
Congress’s Trade Policy Is Increasingly Delusional. "The prevailing rhetoric on trade corresponds less and less to reality. Ikenson notes that 58 percent of imports are of intermediate goods and capital equipment that companies here use to make finished products. Cutting the cost of those imports by lowering trade barriers helps these companies compete rather than hurting them. That’s one reason for free traders like McCain to ditch the old mercantilist strategy. The other is its increasing political failure. Falling support for trade has many causes, but the failure of almost anyone in politics to make the real and unequivocal argument for it has almost certainly been one." Ramesh Ponnuru in Bloomberg View.
The Importance of Importing, Part 2. "When I talk to people about the importance of imports to Washington’s economy, I like to say that I think that our state benefits from import-related jobs more than most…because we’re such a major trade gateway thanks to our ports, and because we have so many major retail and manufacturing companies that utilize a global supply chain." Eric Schinfeld in the Washington Council on International Trade's State of Trade Blog.