Since 1948, the U.S. annually has celebrated World Trade Month and World Trade Week in May.
In 1988, President Ronald Reagan described World Trade Week as “a truly appropriate time to remember the many benefits international trade has conferred on our country and to reflect on the many blessings the spread of economic freedom has brought, and can bring, to people in every nation.”
Trade freedom is an essential component of the economic freedom Reagan mentioned and which The Heritage Foundation grades annually as part of its Index of Economic Freedom.
Trade freedom in the U.S. has been on the decline in recent years due in large part to costly tariffs imposed on imports during the Trump administration. In 2020, the U.S. score fell below 80 out of 100 (to “mostly free”) for the first time since 2005.
Prior to 2020, the freedom of Americans to exchange with the world consistently received a grade near 87 (the “free” category).
With World Trade Week taking place May 16 to 22, now is the perfect time to reverse the current trade freedom trend for American families and businesses.
Here are three practical ways that Congress could eliminate costly tariffs that Americans are currently paying:
- Renew and expand the Generalized System of Preferences, which is a trade program that temporarily eliminates tariffs on imports from developing countries. Each year, the program saves American businesses and families roughly $1 billion in tariffs. The Generalized System of Preferences expired on Dec. 31, and its prolonged lapse cost Americans $135 million in extra taxes between January and February. Congress should renew it as soon as possible. The program could also be expanded to allow for tariff-free treatment of apparel and textile products, which are currently exempt and are subject to some of America’s highest tariff rates.
- Approve a new Miscellaneous Tariff Bill, which temporarily suspends or reduces tariffs on imported products with zero, or insufficient, domestic availability. Many of the products included in Miscellaneous Tariff Bills are intermediate goods, such as chemicals and foodstuffs, and eliminating tariffs on them helps American businesses to stay competitive. Tariff modifications under the last bill expired on Dec. 31. Congress should approve the latest legislation eliminating miscellaneous tariffs without delay.
- Permanently eliminate tariffs on manufactured goods. On average, Americans pay a tariff of 1.1% to import manufactured goods from abroad. A recent Heritage Foundation study found that eliminating tariffs on those goods would increase U.S. exports in all sectors, reduce prices paid by consumers, increase U.S. gross domestic product, and create more and better-paying jobs. More affordable manufactured goods, many of which are inputs used to make other products, also improve the competitiveness of American manufacturers. Congress should eliminate all tariffs on manufactured goods imports.
For more than 25 years, Heritage’s Index of Economic Freedom has shown that individuals in countries with higher levels of trade freedom are more prosperous. When tariffs are eliminated, Americans enjoy greater choice and affordability, and American businesses are more competitive at home and abroad.
Congress should take World Trade Month and World Trade Week as a mandate to eliminate those barriers today.
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