a hidden tax

Trade barriers are a tax - albeit a hidden tax. Suppose the U.S. government tacked a 30-cent tax on every gallon of orange juice sold in America. The conservative antigovernment forces would be up in arms. So would liberals, who generally take issue with taxes on food and clothing, since such taxes are regressive, meaning that they are more costly (as a percentage of income) for the disadvantaged. Well, the government does add 30 cents to the cost of every gallon of orange juice, though not in a way that is nearly transparent as a tax. The American government slaps tariffs on Brazilian oranges and orange juice that can be as high as 63 percent. Parts of Brazil are nearly ideal for growing citrus, which is exactly what has American growers concerned. So the government protects them. Economists reckon that the tariffs on Brazilian oranges and juice limit the supply of imports and therefore add about 30 cents to the price of a gallon of orange juice. Most consumers have no idea that the government is taking money out of their pockets and sending it to orange growers in Florida. That does not show up on the receipt.


Charles Wheelan. Naked Economics: Undressing the Dismal Science by Charles Wheelan. W.W. Norton & Company. 2002. P.195