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Tariff taken to the cleaners
22nd May 2008
Tyler Cowen’s Marginal Revolution alerted me to this neat story about the unintended consequences and costs of import tariffs
A decision by the US government to introduce an import tariff on cheap coat hangers from China is causing problems for dry-cleaning businesses. Some are resorting to asking customers to return their hangers to keep costs under control. The tariff was designed to counter allegations of dumping by Chinese producers which threatened the survival of the USA’s sole-surviving coat hanger manufacturer. But, as is the case with so many import tariffs, the gains from protectionism in terms of jobs saved and domestic output preserved, are outweighed by the higher costs facing industries that use coat hangers - dry-cleaners, hotels and clothese retailers.
More background available here
and here
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.