When it comes to global trade, free-marketeers like it simple: no tariffs, no subsidies. But the most well-intended, highly-principled policy proposals always buck up against stark political and economic realities—and never was this more true than when it comes to the global market for sugar. As a staple, we want America’s working families to have access to inexpensive sugar, regardless of where it comes from. But we also want to ensure that those working families have access to jobs here at home.
In a perfect world, we would need neither tariffs nor subsidies. But the problem is, of course, this is not a perfect world, and the sugar marketplace, like the marketplaces for all sorts of other goods, is the “happy hunting ground” for nations willing to heavily subsidize their crony corporate entities so that they can “dump” sugar on the American market, submarining an entire domestic industry.
It would be one thing if these foreign traders were operating on their own. If they were not being heavily subsidized by their own governments, and were able to deliver sugar (or any product, for that matter) to the marketplace faster and cheaper than American companies, then we would have no cause to protect our interest and put up barriers. We would simply have an impetus to put our shoulders to the grindstone and do what we have done for centuries: put our good, old-fashioned know how to the test and enhance our own productivity (America’s problem is, of course, compounded by our own regulatory state, which drags away nearly 15% of GDP, and adds heavily to the cost of the goods we want to sell, both domestically and for export).
So while American companies hobble along, our competitors try to grease the skids. Brazil, a well-established player in the sugar game, provides nearly $2.5 billion in tax breaks and “loans” to its sugar companies under the guise of industry-building. Or Sudan, which is trying to become a player in the global sugar market, and has injected hundreds of millions (if not billions) of dollars into its industry. As a result, we put on our own tariffs as a way of leveling that playing field. But instead of playing this game of trade brinksmanship, in which everyone loses (the combination of tariffs and subsidies can only go so far), what we should be doing is looking at the long-term solution.
Simply put, what we must engage in is a radical de-escalation of the trade war.
What we should be doing is actively working to level the playing field between us and our trade partners—telling them that we will remove our tariffs once (and only) when they stop heavily subsidizing their industries.