Cutting the cost of imported inputs should help U.S. producers compete on price

“Before U.S. companies are exporters, they are producers. And as producers of goods, they are consumers of capital equipment, raw materials, and other industrial inputs and components. Many of the inputs consumed by U.S. producers in their operations are either imported or the costs of the inputs are affected by imports,” Daniel Ikenson points out in his response to the Trade Promotion Coordinating Committee (TPCC) invitation to comment on U.S. export policy. [See more on the comments to TPCC here.]

Ikenson (who is affiliated with the Cato Institute but in this instance speaks only for himself) also notes that U.S. producers account for over half of the value of U.S. imports. During the recent recession, both the Mexican and Canadian governments cut tariffs across the board on industrial inputs and other products to spur domestic and export sales for its manufacturers.  

Just so. On August 11, President Obama signed the United States Manufacturing Enhancement Act of 2010 suspending or reducing tariffs on a new list of imported manufacturing inputs through December 31, 2012. The Act also extends previous suspensions and reductions.  (Specific inputs are listed in the Act.)

The National Association of Manufacturers says the Act will help create jobs, cut costs for businesses and consumers and boost U.S. exports. The industry trade group says studies show that the bill would increase production by $4.6 billion and support 90,000 jobs.

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