Canadian Finance Minister Jim Flaherty said on Sunday the government would eliminate tariffs on dozens more products used by Canadian manufacturers, aiming to lower their costs and encourage more hiring.The initiative would scrap custom duties on 70 items used by businesses in sectors such as food processing, furniture and transportation equipment.
Flaherty, who estimated the tariff cuts would save Canadian businesses C$32 million ($30.5 million) a year, said the cuts were part of the Conservative government’s overall free trade policy.
“We believe in free trade in Canada,” Flaherty said on CTV’s “Question Period” program. “Some of these old-fashioned tariffs get in the way. So we’re getting rid of them.”
Well this is certainly a step in the right direct.Â Despite the “we must stimulate exports through currency devaluation” dogma exhorted by classical mercantilists and mainstream Keynesians, exports can be stimulated in more effective ways than impoverishing those on fixed income with currency dilution.Â As M. Perry mentions, tariffs are essentially a tax on imported goods paid by all consumers.Â Reducing tariffs or duties is essentially the same as cutting taxes.Â Both leave more income in the hands of the productive private sector rather than the grubby mitts of the state.
At the same time, productive inputs that a country imports often increase in cost due to tariffs and trade restrictions.Â So while tariffs restrict foreign competition domestically, they also increase the price of potential manufacturing inputs like capital goods that are produced cheaper abroad.
Tariffs and duties are the product of isolationism and provide economic benefits for the few at the expense of the masses.Â Canadians should embrace Flaherty’s endorsement of free trade.