# Tariffs, Quotas, and Subsidies **URL:** \ **Category:** Factual Questions\ **Created:** [June 9, 2018, 9:17pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781 "2018-06-09T21:17:44Z")\ **Posts on this page:** 19\ **Page:** 1
**Author:** ![Sage\_Rat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sage_rat/32/399_2.png) [@Sage\_Rat](https://boards.straightdope.com/u/Sage_Rat)\ **Post date:** [June 9, 2018, 9:17pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/1 "2018-06-09T21:17:44Z")
The President, during the G7 meeting, seemed to imply that the EU has a variety of protectionist economic measures in place that the US does (or did) not and so the recent tariffs are just bringing the US up to match. Generally, the media will say when the President is wrong. In this case, no one seems to be reporting on the subject beyond what Trump said. What is the fact of the matter? I know the US has corn subsidies in place. I don’t know what all else we have or have not had in place. I have no idea what the EU might have. ---
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [June 9, 2018, 9:26pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/2 "2018-06-09T21:26:36Z")
The interpretation I’d heard is that Trump counts VAT as a tariff, not noting that European domestic producers also have to pay it (so it doesn’t give domestic producers any advantage). A roughly analogous situation would be a state with a high sales tax taking complaints from a state with a low sales tax that the sales tax on goods imported from the low tax state is a tariff on imports from the low-tax state. ---
**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\ **Post date:** [June 9, 2018, 10:23pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/3 "2018-06-09T22:23:05Z")
Here’s a [French position paper on agriculture](https://frenchfoodintheus.org/482) that says agricultural subsidies in Europe account for 0.5% of GDP. I’ve seen sources that say the U.S. spends [$20-$25 billion per year](https://www.downsizinggovernment.org/agriculture/subsidies)in agricultural subsidies. Given that the U.S. GDP is running at about $19.9 trillion per year, that would put U.S. agricultural subsidies at about 0.125% of GDP. Of course, subsidies and protection work in many different ways. For example, Boeing received no government subsidy to develop the 707, but was able to re-use a tremendous amount of research from their development of large jet bombers for the Air Force. ---
**Author:** ![AskNott](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asknott/32/5790_2.png) [@AskNott](https://boards.straightdope.com/u/AskNott)\ **Post date:** [June 9, 2018, 11:57pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/4 "2018-06-09T23:57:38Z")
Nearly any factual answers about President Trump and the G7 would contest his statements there. A fella could get into hot water talking so politically in General Questions. Perhaps this is the wrong forum for it. ---
**Author:** ![penultima\_thule](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/penultima_thule/32/3833_2.png) [@penultima\_thule](https://boards.straightdope.com/u/penultima_thule)\ **Post date:** [June 10, 2018, 2:42am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/5 "2018-06-10T02:42:16Z")
> [@Sage\_Rat](#): > > I know the US has corn subsidies in place. I don’t know what all else we have or have not had in place. Any notion that the US is a free trader is fanciful. In agriculture alone, not only in relation to it’s domestic consumption but exports and even in it’s food aid programs, where the US has a tendency to insist that GM corn/soy be taken to a Trojan Horse strategy. Just looking at US agricultural products with substantial subsidies or tarrif protections: Corn Wheat Soybeans Rice Barley Sorgum Milk Beef Peanut butter Sunflower oil Sugar Also in products where the US is a niche producer like; Lamb Wool Mohair even a subsidy on whaling (ended 2011) ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [June 10, 2018, 3:18am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/6 "2018-06-10T03:18:22Z")
[Some](https://www.cnbc.com/2016/12/07/trump-tariffs-countries-and-products-that-pay-the-highest-us-tariffs.html) about the tariffs the United States places currently, listing rates by country. > [@](#): > > The tariffs themselves are remarkably granular: If you’re in Vietnam and want to import boys’ dress shirts manufactured with man-made fibers (with less than two colors), it’ll cost close to 30 percent. But Mexico could ship the same shirt for free, and anyone could import certain types of mittens without paying tariffs. > > Most of the tariffs collected on incoming goods are levied on clothes, shoes and vehicles, according to CNBC’s analysis. Those three product categories alone account for more than half of all duties collected, though they make up only about 2 percent of imports by value. > > The import value of those clothes and shoes is worth a fraction of that for electronics, machinery and cars, but clothes and shoes are taxed at a much higher rate. On average, apparel tariffs charge 13 to 14 percent, compared with less than 1 percent for some of those other goods. That’s why consumers today barely notice the cost of tariffs, while a company selling a specific product can be slammed by even a small increase. [More detail.](http://www.pewresearch.org/fact-tank/2018/04/05/despite-talk-of-trade-war-with-china-highest-u-s-tariffs-are-on-imports-from-other-asian-countries/) ---
**Author:** ![Snnipe\_70E](https://avatars.discourse-cdn.com/v4/letter/s/b5a626/32.png) [@Snnipe\_70E](https://boards.straightdope.com/u/Snnipe_70E)\ **Post date:** [June 10, 2018, 4:40am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/7 "2018-06-10T04:40:04Z")
> [@leahcim](#): > > The interpretation I’d heard is that Trump counts VAT as a tariff, not noting that European domestic producers also have to pay it (so it doesn’t give domestic producers any advantage). > > A roughly analogous situation would be a state with a high sales tax taking complaints from a state with a low sales tax that the sales tax on goods imported from the low tax state is a tariff on imports from the low-tax state. My understanding (and I may be wrong) When a product is exported with a VAT the tax is refunded to the manufacture. And when a product is imported the VAT is added to that product along with normal tariffs. But When a product is exported from the US there is no tax rebate. And an imported product only has a tariff added. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [June 11, 2018, 2:12am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/8 "2018-06-11T02:12:27Z")
Here’s an article from TIME following this weekend’s events: “President Trump complained about U.S. trade with Canada. Here’s what he got wrong .” > **[President Trump Complained About U.S. Trade With Canada. Here's What He Got...](https://time.com/5307687/canada-trade-relationship-trump-trudeau/)** > > Our top trading partner. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [June 11, 2018, 2:46am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/9 "2018-06-11T02:46:54Z")
The problem is as I understand it - Canada has a marketing board arrangement. You want to farm cows(?) you need a quota from the Canadian milk marketing board, otherwise you cannot sell any milk anyhow to anyone. (IIRC there’s a small exception about making cheese on farm or something). The milk marketing board buys all the milk at a fixed price and sells it to the dairies and cheese-makers ( “…blessed are the cheesemakers…” ) at a fixed price, recouping enough to pay board operations. Supplies are limited, dairy farmers are solvent, consumers pay the price to keep things this way. Foreign imports are given a quote too - anything not in that quota pays the horrible 300% tariff. You gotta really want that Wisconsin organic brie at those prices. The USA does not control milk marketing. Correct me if I’m wrong, I don’t really know the details. Everyone does what they want, grows what they want, sells where they want. The difference is, they pay subsidies to those farmers lucky enough to qualify. Thus those farmers don’t have to sell for cost, they can sell for cost-minus-subsidy. This is a disincentive for anyone else to get into the business, unless they are incredibly cost efficient. So prices in the USA for milk and cheese are much lower. The taxpayers instead generally support the select farmers, thus keeping others out of the business. Trump would like Canada to allow unlimited imports without tariffs on milk, cheese, yoghurt, ice cream etc. Trudeau asked if no tariffs included “no subsidies” and it wasn’t clear Trump understood what he meant… But I seriously doubt the senate or congress is going to turn off the tap to the famers who elected them. I think the European model is (or used to be) a board that bought up excess production from farmers to keep prices high,which decades ago resulted in the infamous “lake of wine” complaint. What Trump really wanted was to cancel NAFTA and have two separate deals, negotiating separately with Mexico and with Canada. Since the USA has no interest in honoring its trade deals anyway (google “Canadian softwood lumber dispute” or “Canada national security threat to USA”) there is strength in numbers when dealing with the USA. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [June 11, 2018, 3:04am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/10 "2018-06-11T03:04:19Z")
Suppose Canada eliminated its dairy tariff. If the US taxpayer subsidizes farmers, and farmers can export dairy products to Canada at cheaper prices that what Canadians pay, then the US taxpayer is effectively subsidizing Canada dairy consumers. Right? Why would Canada be opposed to that? ---
**Author:** ![Gorsnak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gorsnak/32/7587_2.png) [@Gorsnak](https://boards.straightdope.com/u/Gorsnak)\ **Post date:** [June 11, 2018, 4:19am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/11 "2018-06-11T04:19:10Z")
Canadian consumers wouldn’t be, but dairy farmers emphatically would be. For reasons that elude me, they have significant lobbying power. The new leader of the federal Conservative Party actually owes his position to signing up a bunch of party members in Quebec with the promise of maintaining the supply management system (his opponent was one of vanishingly few politicians who has dared suggest it be dismantled). Anyways, if we dropped the tariffs, we’d also drop the quota system so that our dairy farmers would stand a fighting chance. Would likely also have to match US subsidies. Milk would be cheaper, taxes would be higher. Seems like pretty much a wash, unless both sides eliminated subsidies. ---
**Author:** ![hogarth](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hogarth/32/1773_2.png) [@hogarth](https://boards.straightdope.com/u/hogarth)\ **Post date:** [June 11, 2018, 4:44am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/12 "2018-06-11T04:44:30Z")
> [@Gorsnak](#): > > Canadian consumers wouldn’t be, but dairy farmers emphatically would be. For reasons that elude me, they have significant lobbying power. Perhaps not unlike corn farmers in the U.S. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [June 11, 2018, 4:48am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/13 "2018-06-11T04:48:02Z")
Sûre, let’s get rid of our dairy industry and rely on the US to provide cheap dairy. And then Trump gets in a hissy fit and blocks all dairy exports to Canada, because exporting dairy to Canada weakens US national security. We’re past the point where the US was a reliable ally. Every G6 nation has to assume the US will act irrationally, and plan accordingly. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [June 11, 2018, 4:49am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/14 "2018-06-11T04:49:34Z")
A big picture view, by economist Justin Wolfers on Twitter: [INDENT][INDENT][INDENT] Average tariff rates charged by G-7 nations: USA: 1.6% EU: 1.6% UK: 1.6% Italy: 1.6% Germany: 1.6% France: 1.6% Japan: 1.4% Canada: 0.8% Source: [https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS?end=2016&start=2016&view=bar](https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS?end=2016&start=2016&view=bar) [/INDENT][/INDENT][/INDENT] [https://twitter.com/JustinWolfers/status/1005477243437580288](https://twitter.com/JustinWolfers/status/1005477243437580288) ETA: US protects dairy like everyone else. [US Trade Policy on Dairy Is Simple: We Basically Allow No Imports at All – Mother Jones](https://www.motherjones.com/kevin-drum/2018/06/us-trade-policy-on-dairy-is-simple-we-basically-allow-no-imports-at-all/) ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [June 11, 2018, 5:17am UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/15 "2018-06-11T05:17:38Z")
Just realised that this thread is in GQ, not GD, so my earlier response to **Ultra Vires** ’s question was out of line. My apologies. Let me give a GQ answer: Every nation has an interest in a secure food supply, and should avoid becoming entirely reliant on foreign sources for basic food requirements. While trade in food between countries is a good thing, just like other types of trade, Canada has an interest in retaining domestic food sources, in case there is ever a dispute of some sort with food sources from other nations. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [June 11, 2018, 4:32pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/16 "2018-06-11T16:32:38Z")
The question is too complex for a real answer but in terms of agricultural subsidies the US spends less than most other countries. [Asia](http://www.worldwatch.org/agricultural-subsidies-remain-staple-industrial-world-0)is the biggest subsidizer of agriculture with China spending $165 billion per year, Japan $65 billion, Indonesia $28 billion, and South Korea spends $20 billion per year. The EU spends $106 billion. The US spends $30 billion, Canada, $7.5 billion, and Mexico $7 billion. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [June 11, 2018, 4:56pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/17 "2018-06-11T16:56:48Z")
This is really a rabbit hole of a question. I first looked into this as part of my senior thesis for farm subsidies, specifically soy and corn growing because, at the time, it had a lot of political noise. There is a metric ton of data at a very granular level and parsing it all out was like a full time job, which explains all the openings under my professor at the time. I was like f\* all that noise and went with macroeconomic policy considerations half-assing it while I focused on working 2 jobs for school (admittedly, one of those jobs was for beer money). When my first corporate company I was working for was doing governmental work associated with this type of data, I asked some people closely associated with it and the response of going to go find data made me realize why there is indeed a bureaucracy. As purely anecdotal evidence, any place I have ever traveled to, 99.999% of the time, the same good found in the US was cheaper in the US, at least sticker price wise. If the good was an American-based product, e.g. Levis jeans, the price was at least 100% more expensive. My limited education on the topic would lead my to hypothesize that these price differences are due to tariffs. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [June 11, 2018, 5:15pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/18 "2018-06-11T17:15:29Z")
There’s also the problem of labelling and similar non-tariff barriers. there used to be (still is?) a moderately good back and forth of beef and pork between Canada and the USA. A large amount of beef cattle were shipped from Canada to the USA. Ranchers there finished raising the cows and then took them to market along with cows raised in the USA. There’s a high demand for beef in the USA and we also have farmland in Canada. Then, thanks to Mad Cow, the USA decides that all meat products must be labelled with country of origin. So to continue this trade, farmers would have to keep the Canadian and US cows separate, then keep the resulting meat separate all the way to retail - not worth the cost. (Incidentally, the USDA forbids private mad cow testing, and there were suggestions at the time they hid positive results in the USA to prevent Japan form banning entry to all US beef…) Most countries use similar tricks - they are common enough that “non-tariff barriers” are a real problem; whether its something as simple as requirements to certify disease-free conditions, or labelling requirements, etc. ---
**Author:** ![SmartAlecCat](https://avatars.discourse-cdn.com/v4/letter/s/67e7ee/32.png) [@SmartAlecCat](https://boards.straightdope.com/u/SmartAlecCat)\ **Post date:** [June 11, 2018, 5:53pm UTC](https://boards.straightdope.com/t/tariffs-quotas-and-subsidies/815781/19 "2018-06-11T17:53:05Z")
Any discussion of dairy also needs to include a discussion of hormones: [https://www.dairygoodness.ca/good-health/dairy-facts-fallacies/hormones-for-cows-not-in-canada](https://www.dairygoodness.ca/good-health/dairy-facts-fallacies/hormones-for-cows-not-in-canada) > [@](#): > > In Canada, no cow can be given artificial hormones to increase its milk production. This means that no milk, cheese or yogurt produced in Canada contains these hormones. > […] > Although Health Canada does not permit the use of recombinant bovine somatotropin (rbST), this growth hormone is legal and considered safe in the U.S. and other countries.