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Why Tariffs Fall Short of Boosting US Competitiveness
In a recent testimony before the US Joint Economic Committee, Erica York, a Senior Economist at the Tax Foundation, addressed alternatives to tariffs for enhancing US competitiveness. York's insights pointed out that while tariffs aim to protect jobs, they inadvertently stifle productivity and economic output, hindering long-term economic growth.
The Ineffectiveness of Trade War Tariffs
York highlighted that the tariffs imposed during the 2018-2019 trade conflicts did not achieve the intended goals of bolstering manufacturing jobs or output. She explained that the decline in manufacturing employment follows a historical trend where the economy naturally transitions from manufacturing to services. This change is not a consequence of trade policies but rather due to advancements in technology and increased productivity.
Looking Toward the Future: Emphasizing Productivity
York suggested a transition towards consumption-based taxes as a potential strategy for enhancing productivity and competitiveness. This shift could encourage investment and innovation, driving economic growth without relying on tariffs. By focusing on policies that foster productivity, the US can remain competitive globally while adapting to changes in manufacturing.
Source: For a deeper understanding of the nuances of tariff impacts and alternative economic strategies, visit the full testimony at: https://taxfoundation.org/testimony/tariffs-alternatives-boost-us-competitiveness/
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