(March 20, 2008) – In a shocking move today, the South Korean government broke step with almost every other government in the world, including ours, and decided to move away from protectionism by reducing tariffs. You can read the story by clicking here.
Starting April 1, President Lee Myung-bak’s government will reduce import tariffs on about 70 grains and raw materials, including wheat, corn, soybean cake and coffee cream, while cutting tariffs on 18 other items.
When asked about the move, Senator Schumer responded, “It’s sad, really. These guys obviously don’t understand how the political game is played.”
In separate news, Korea today reported its GDP increased 5% in the last year.
JR
Does lifting tariffs really reduce inflation in any significant manner? What are the fiscal implications of tariff reduction?
KG
KG,
A reduction in tariffs should not cause a sustained reduction in the inflation rate–only higher productivity growth or lower money growth will do that–but it will cause a meaningful one-time drop in the level of consumer prices because the tax will no longer be passed along to consumers.
JR
Yes Senator Schumer, they really don’t get it. perhaps we can convince them that what they really need is a farm bill to get those poor dirt farmers protected. how do you spell ADM in Korean?
Thanks again Dr. John, for great insights and contributions here and at RM. And for sometimes having the largest tongue in the largest cheek!
Cheers-
Allen in Maryland