ARI SHAPIRO, HOST:
President Trump is preparing to announce another big round of tariffs tomorrow. He argues that import taxes help protect U.S. producers from foreign competition. Some domestic industries already enjoy special protection thanks to tariffs and other trade barriers. NPR's Scott Horsley reports on how those protections affect the rest of us.
SCOTT HORSLEY, BYLINE: The homegrown American product that's most sheltered from foreign competition today is sugar. Economist Wes Peterson says that's largely thanks to the Cuban revolution.
WES PETERSON: Back in the '50s, we were getting all of our sugar from the Caribbean, mostly from Cuba. And then Fidel Castro came in and took over, and so we cut all of our relations with Cuba. And suddenly, we weren't getting our sugar from the Caribbean anymore.
HORSLEY: To encourage domestic sugar production, the U.S. government imposed strict limits on sugar imports. As a result, Americans now pay almost twice as much for sugar as people elsewhere around the world. The absolute cost is still fairly low, about 38 cents a pound last year. So Peterson, who's at the University of Nebraska at Lincoln, says for most people, this trade barrier is easily overlooked.
PETERSON: If you go to a supermarket and buy five pounds of sugar, this is not going to break your food budget. But if you're producing candy and your main ingredient is sugar, this is a big deal.
HORSLEY: Just ask Kirk Vashaw, a fourth generation candy maker in Bryan, Ohio.
KIRK VASHAW: Dum-Dums is our flagship brand. We're the only candy cane manufacturer in the United States.
HORSLEY: Sugar is the main ingredient in those sweets, accounting for more than half the cost. So most of Vashaw's competitors have left the U.S. in search of cheaper sugar elsewhere. He understands that pressure.
VASHAW: If we were a public company, we would get closed down tomorrow and moved. But, you know, we're just doing our best to maintain our family business here in Bryan and support the community.
HORSLEY: Vashaw's company, Spangler Candy, supports more than 500 employees in Ohio, not to mention businesses that supply machinery, packaging and lollipop sticks, all of whose livelihoods are threatened by policies that keep the price of sugar in the U.S. artificially high. Customers who use sugar, which is most of us, far outnumber domestic sugar producers, but Peterson says those sugar producers still have a lot of political clout.
PETERSON: It's a lot easier to organize to lobby the government if you're a fairly small, concentrated industry than if you're a large, diverse group of people like consumers. Consumers always have a hard time getting organized, whereas the producers are often very, very effective.
HORSLEY: Policies that protect the domestic sugar industry have even outlasted Fidel Castro. Tariffs and other trade barriers often outlive their original purpose. Back in the 1960s, for example, the U.S. was unhappy with a German tax on imported chicken. So in retaliation, policymakers imposed a 25% tax on imported pickup trucks. That pickup truck tariff is still in place more than 50 years later, and it's reshaped the domestic auto industry. Chief economist Eugenio Aleman of Raymond James says U.S. carmakers have focused on building big pickup trucks that don't face foreign competition, while largely ignoring the market for smaller, cheaper cars.
EUGENIO ALEMAN: This is one of the things that tariffs do. I mean, they distort markets.
HORSLEY: Businesses that benefit from protectionist policies often have less incentive to invest, invent and compete on the world stage. While building big pickup trucks has been very profitable for U.S. automakers here at home, Aleman says there's not much market for those vehicles elsewhere around the world.
ALEMAN: Have you seen the roads in Europe? These are very old cities where American cars cannot turn the corner because they are so big that it's impossible (laughter).
HORSLEY: Trade barriers can also be a disadvantage when domestic supplies run short. A few years ago, when one of a handful of baby formula factories in the U.S. was shut down due to contamination, nervous parents around the country were suddenly faced with empty store shelves. Eventually, the shortage was relieved with the help of imported baby formula, but only after government restrictions were relaxed. It's a reminder that sometimes the most reliable supply chain is not necessarily homegrown.
Scott Horsley, NPR News, Washington.
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