Playing the Trading Card (Craig Douglass On Consumers)

“That’s a great concern to me.” So said Gov. Asa Hutchinson, commenting about the Trump administration’s dicta on trade policies with current partner countries. In fact, the president and his spokesman have put forward specific notions, including a 20 percent tariff on Mexican-made goods coming into the United States. Yikes!

The cost of your new American-made or assembled car or truck with parts from south of our border just went up.

The governor’s concern is that a protectionist-influenced trade policy will most likely hurt global trade, trade that benefits Arkansas’ homegrown and homemade exports to the international marketplace. If the United States were to impose onerous tariffs on foreign goods, the effect on Arkansas consumers would be higher prices, while at the same time running the risk of offshore countries retaliating against our country — meaning our individual states — vis-à-vis the goods we sell abroad, higher costs for consumer goods and stifled marketing for our export-bound products. We agree with the governor’s concern. Yikes, indeed.

Because, in part, of Mr. Trump’s tariff-rattling rhetoric, trade policy is getting some attention, and welcomed transparency. It’s not usually the type of inside-government policy on which consumers focus. But we should. Perhaps a little consumer activism on this subject would be helpful to avoid being tarrified (sorry).

In the protectionist trade policy toolkit, tariffs and quotas are the most widely used implements. A tariff is an additional tax that is levied by governments on imported goods. The tax discourages foreign countries and their businesses from doing business here, or makes their products noncompetitive with our own goods, thus protecting our producers. The result, however, can be loss of quality, lower supply levels and higher prices for consumers on products with hidden, foreign-made components. Spending more money on that stuff depletes the wherewithal to buy other goods and services. The policy might protect some producers, but it surely will not protect our consumers.

Quotas very simply limit the quantities of offshore goods that can come into the country. These import quotas restrict consumer choice, increase prices and retard our trading partners’ interest in allowing our goods into their country. They become erstwhile, possibly eliminating trade altogether.

Tariff talk creates the tantalizing idea that we can grow and sell our own right here, without outside competition. The trouble is, we can grow and manufacture too much for our own consumption. And our own good. You know the rule: If the supply exceeds the demand, profits sink and the incentive to produce evaporates. We need foreign markets.

(I vividly remember being instructed in elementary school that Arkansas had such diverse natural resources, we could build a wall around the state and survive. Orval Faubus was governor when that appeared in the curricula.)

Well, while walls are being discussed as well by this new administration, it seems that withdrawing from the world, or preventing the world from reaching us, is a form of negative nationalism bordering on a narrowing of the wider view, and perhaps a fanatical patriotism or ethnocentrism that fosters chauvinism.

Could it be that some folks are now starting to fear globalization? It smacks of lack of control, of loss of identity. It’s a false choice. The idea benefiting consumers most is integrated economies.

Can we seek a balance without balanced trade? Can we enjoy free trade without predatory competition creating deficits? These issues are way above my pay grade.

What we seek is stability and predictability. Playing the trading card for political gain is ill-advised. Big, one-sided talk is not helpful. It riles markets, creates anxiety, instills distrust and walls-off consumer choice. Fair competition is the goal. Competition breeds quality, excellence, efficiency. America and Arkansas can compete, if unencumbered.

The bottom line is Arkansas jobs. We need trade in agriculture and in originally manufactured goods and assembled, finished and value-added goods. And we need the jobs and job training that are created and mandated by these enterprises. Trade equals jobs. And Arkansas jobs are the focus of this governor.

Craig Douglass of Little Rock is an advertising agency owner and marketing and research consultant. He also is the executive secretary of the Arkansas Good Roads Foundation. Email him at Craig@CraigDouglass.com.