Tuesday, June 28, 2011

"America's Flawed Tariff System" and "Tariff as Revenue"

According to the two articles, I think America's Tariff system really has two problems which are affecting adversely American's living stardand and destorying the countries' mutualtrust tariff rules. Especially, it is going to be tougher and tougher for citizens when government increases tariff of some basic materials or resources, such as flour, rice, and steel. Increasing the prices of these materials will bring a chain reaction to other daily necessities and light industry products. All the things will seriously influence the lives of poor people. Furthermore, the U.S. government's tariff revenue is extremely consisted by low-tech consumer goods (average rate of 10.5%) and the rest of consumer goods(0.8%). It is no doubt that the incresed costs must be transferred to customers. The situation will hurt people strongly who have lower income. The less the people earned, the more the people being hurt.
Sincerely, I believe that America's tax system and tariff system are unfair for its blue-collor workers and other developing countries which rely on their exported light industry goods, such as shoes and clothes. In fact, the government imposes higher taxes and tariff on them that result in a bad trade interaction and tough lives. However, the U.S. government should try to figure it out before something worse happened.

Tuesday, June 21, 2011

Has the war on terror become its own barrier to trade?

From my point of view, it is definitely true. As the case mentioned, the nation's transportation companies increased a lot of costs associated with preventing terrorism attack. In addition, numbrous transportation delays have accompanied with the security check. It is an absolute loss for those companies in the United States because they have to deal with the added costs. Generally speaking, it is no doubt that the added costs will be transferred to the customers or outside partners. However, it will result in decreasing willingness for other outside companies to team up with the U.S. companies. In other words, the trade barriers apparently exist after 911 terrorism attack.
But, from the point of Government view, it would be the first important emergency response which they have to implement well. It is because they could not even afford a second similar attack that will dramatically shock down the global trade business of United States. Moreover, the tourism industry which U.S. relys on a lot would affect adversely as well.
In conclusion, I think the associated delays and costs for preventing terrorism threat are much worth than it should be. However, I rethink that might be the only way for U.S. to win back its reputation and the confidence of international companies.

Monday, June 13, 2011

Can U.S. public policy affect comparative advantage?

According to this case, I strongly believe that the public policy of U.S. affect adversely the U.S. auto industry. For example, Detroit's Big Three have to take care of employees' benefits such as health-care and pension. On the other hand, compared with other foreign auto companies, they obviously did much less then U.S. auto companies. Therefore, foreign companies have more resources to reduce their costs, increase their marketing campaign, and wilder promoting. In general, I do not see any useful help from the U.s. government. From my point of view, I think the U.S. government should modify their public policy for rescuing its auto manufacturing industry. For example, the Government could provide some discounts or incentives for consumers who purchase U.S. cars in order to improve its comparative advantage. Moreover, they could also boost tariff to protect its auto business, no matter a conventional tariff or a protective tariff. Although foreign competition can inspire domestic development, sometimes excess competition will destroy the whole plan.