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In class a few weeks ago, I talked about how imposing tariffs in order to save jobs was a really expensive way to save jobs. (Aside: if saving jobs was a motivating factor, which I argue is unimportant, but be that as it may …). The most recent high profile tariff was the Obama Administration imposing a 35% tariff on imported Chinese tariffs.
An enterprising student (HT to Sean A.) put together these simple numbers. I only mildly edit his response to my inquiry about the costs:
I have been doing a little research on the Chinese tire tariff, and I have found some very interesting info.
However, as far as calculating the cost per job saved, I expect there to be a good amount of error in my calculation, as I have read many different articles, each with varying statistics on how many Chinese tires are imported, how many jobs have been lost in the past due to Chinese tire imports, and the estimated increase in the price of a tire.
So, the first piece of information I gathered was from this source: http://www.freetrade.org/pubs/FTBs/FTB-039.html. From the source, I quote, “According to data compiled by the ITC staff, the average unit price (based on the customs value) of a tire imported from China in 2008 was $38.98.”

So, an increase of the price of a Chinese tire by 35% (the tariff) would be $38.98 x .35 = $13.64 increase.

The next info I got was from this source: http://www.siouxcityjournal.com/news/local/article_95f7420e-07ed-5bc9-88a7-26b92f1e9d40.html. From this source, I quote, “The U.S. imports nearly 48 million tires from China annually

So, 48 million tires imported from China annually times the $13.64 increase in the price of a tire equals a total increase of $654,720,000 annually on all Chinese imported tires.

From the same last source, I quote again, “5,000 — Number of U.S. jobs the United Steelworkers estimates have been lost since 2004 due to Chinese tire imports.

Because this article does not specify whether this number was measured since the beginning or end of 2004, I will roughly estimate that 900 affected jobs were lost per year from 2004 to today.

So, to find the annual cost of saving one affected job per year, we would divide the annual total increase of the cost of Chinese imported tires by the annual loss of affected jobs.

This is $654,720,000 divided by 900, which is 727,466.67 dollars cost per job saved

For some reason I am having huge doubt that the cost could really be that high to save one U.S tire producing job …
His last sentence is why I challenged the students to do a back of the envelope. It is largely consistent with the cost of saving jobs from other tariffs and programs, and yes, it is unbelievable (ignore the effects of lower purchases, because the tariffs will not generate this much revenue). For example, a recent study in Spain showed that the cost of creating “green jobs” in Spain exceeded $1 million in certain industries. And I have seen a good many similar calculations like the one above.
Even if you think “we” have an obligation to protect these tire jobs (which I do not grant that we do), would you pay $700,000 per worker per year, to save a job that is paying (with all compensation included) around 10 times LESS than that? Only in government can spending 10 times more than you need to achieve an objective be considered good policy. Wouldn’t it be preferable to pay these workers directly $70,000 per year to not work, and still allow us to get inexpensive Chinese tires? And to think, this increased cost to save middle-class American jobs is coming out of the pocket of the lower and middle income Americans most likely to consume these tires. Now that’s Progressive!

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