In the news: Fred Hochberg '70

Click READ MORE to read Fred Hochberg '70's opinion piece featured in the Wall Street Journal. Fred is the author of Trade Is Not a Four-Letter Word: How Six Everyday Products Make the Case for Trade.

An Overlooked Way to Combat Inflation: Easing Tariffs on Imports
by Fred P. Hochberg

Over the past several years, trade has been blamed for much of what is wrong in America, and there is no question that trade policy must take into account labor rights and the environment.

But voters today are worried about inflation and how it’s eating into wages. And they are worried about the power of big companies and their unleashed pricing power. Trade can help curb both.

For the eight years I chaired the Export-Import Bank under President Obama, I championed the power of U.S. exports to boost our economy by creating American jobs. Today I’m convinced that imports are what will give us a boost—by easing price increases and effectively putting money back into the pockets of inflation-struggling Americans. To get these benefits, however, we’ll need to remove some tariffs and embrace trade again.

Inflation may be with us for some time. Monetary policy, the pandemic and the conflict in Ukraine are contributing to it, and a needed transition to alternative energy will raise prices in the short run. Greater supply-chain resiliency will inevitably raise prices as well. Transitions are never without cost.

Allowing more imports will give consumers more choice and tame the power of companies to set prices. During the pandemic, American spending habits tilted away from services toward tangible goods and have stayed there. That put a strain on supply, and disruptions to supply chains caused further strain.

Some relief will come as supply chains heal. Ocean-freight reforms and last year’s infrastructure bill will also help reduce backlogs and ease prices. But another, more immediate way to help lower prices is to reduce or eliminate certain tariffs. This will increase the flow of goods into our country and help put an end to shortages.

We can start with rolling back the Trump-era tariffs on Chinese goods. But let’s not stop there. Clothes and footwear, which account for a large percentage of U.S. imports, have tariffs as high as 18.7%, well above the 3% average. Price increases on clothes and footwear affect all Americans but hit low-income households hardest. High tariffs on some fruits and vegetables, such as peanuts exceeding 130%, also contribute to higher food costs.

American consumers, not foreign businesses, end up paying for tariffs. By one estimate, Trump-era restrictions on Chinese goods have cost U.S. households $1,000 a year. It’s time to put that money—as well as more choice and pricing power—back in the hands of American consumers.

The recent baby-formula shortage is another example of how easing import restrictions can forestall a crisis. Relying on only four domestic suppliers proved a recipe for shortages and higher prices. From beef to tires and household appliances, our economy is at risk from high levels of concentration.

Inflation and rising prices are kitchen-table issues that all voters understand. Easing import restrictions and reducing tariffs need to be part of our toolkit to tame inflation.

Mr. Hochberg is author of “Trade Is Not a Four-Letter Word: How Six Everyday Products Make the Case for Trade.” He was chairman and president of the Export-Import Bank of the U.S., 2009-17.

 
 
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