why aren't tariffs used to protect small businesses?

Question

Big Business has been using tariffs from even before the Civil War to protect themselves from global competition. They probably don't work today b/c of globalization but why hasn't anyone thought of using tariffs to protect the little guy? The apple from your neighborhood farm is probably more expensive than the one from Chile. Only the big companies can afford to import stuff and produce stuff in bulk. Local fruits/veggies are better because they're fresher and they take less greenhouse gas(carbon dioxide) to move around than imports.

Answer 1

Tariffs were used before the civil war and in fact were a major cause of the Civil war.

"By 1860 Southern States being major exporters and importers paid 80 percent of federal taxes and were sure most of it was being spent in Northern states. When Lincoln was elected he promised even higher tariffs and southerners feared even more severe plundering by the North."

Tariffs do work to protect particular industries as least temporarily. But the positive impact is more than offset by the damage to the overall economy. And in the long run the "protected" industries suffer by not being forced to improve or modernize.

There are a couple of recent examples of this. Just look at the steel tariffs imposed by the current administration to protect the domestic steel industry. World wide the end of the cold war left an over capacity in steel production. Steel mills in the former Soviet union were selling steel at below current US cost of production. So tariffs were imposed. For every steel making job saved in the U.S. 8 steel consuming jobs were lost. And that doesn't include the food processing jobs and exports lost when those same countries targeted with steel tariffs discontinued importing food stuffs. It was a net loss to the economy paid for by every consumer, and benefiting only a few steel producers.

In the 1940's and 1950's U.S. automakers were considered the best in the world. Import tariffs designed to protect the domestic automobile companies from foreign competition allowed the U.S. manufacturers to become inefficient and if you remember the 1970's produced some of the worst junk passed off as cars the world has ever seen. The foreign companies have worked around the tariffs by putting plants in the U.S. and now are beating the U.S. automakers. Tariffs have ruined the industry they were designed to protect.

Then there's sugar. Sugar is much cheaper to produce in the carribean than in Iowa. Tariffs and price supports on sugar drive the cost of sugar up in the U.S. and every american consumer pays for the benefit gained by a few U.S. sugar producers.

Where do protective tariffs end. The consumer is never served by limiting competition, and in most cases the protected industry is destroyed as well.

Answer 2

Well from a cynical standpoint. Small businesses do not have the same kind of lobbying power to enact tarrifes as compared to big businesses. The thing is that current tarrifs do protect little companies more and more since they can't employ the same kind of overseas supplier deals that large companies can. Tarrifs based off of company size would be an interesting concept. But that would not be used because it would cause a lack of motivation for businesses to expand which would ultimately hinder the economy, since businesses see more benefit from staying small and employing less people. It then becomes an issue of how many workers a firm has to determine whether or not it gets tarrifs. It would put American firms at a huge disadvantage to compete globally if they were hamstrung by regional tarrifs.

Answer 3

Because small businesses have no political clout, perhaps?

Also, the most important threat to small business is not globalization, but chains and franchises. So some govenments do have policies that protect small business. In Germany, for example, chain pharmacies are illegal; it is also illegal to sell many cosmetic products and dietary supplements in general stores, so they must be sold only through pharmacies.

Answer 4

The long and short of it is that they do, and plenty of countries have, especially in agriculture. There are tons of small business owners, and they constitute votes, so politicians are very aware.

And if local fruits/veggies were infact better, why would they need protection?