Trump’s tariffs on Chilean products should be canceled

The tariff affects several of Chile’s principal exports to the United States: farmed salmon, fruits and berries, wines, meats and high-value-added wood products. It thus raises US consumer costs for these products--and harms Chilean workers by reducing demand for and exports of these products.

Copper and lithium were exempted--probably because these metals are essential in “renewable” electricity generation and storage; “green” energy advocates oppose most mining for these and other vital metals and minerals in the USA; and America has been too reliant for too long on China and other adversarial nations for these and other strategic materials.

President Trump should reverse this misguided tariff.

The tariffs were promoted by two leftist/progressive Chilean NGOs (Fundación Libera and Centro Ecocéanos), which told the US Trade Representative Office the Chilean government tolerates and even facilitates “forced labor” (subpar or unfair wages), substandard workplace safety standards, and inadequate prosecution of violations in the agricultural and salmon farming sectors.

Chile ranks fourth in South America in labor costs and first in minimum wage. Its agricultural, fish farming, mining, manufacturing and other labor sectors are heavily regulated. They offer health, pension and other benefits in addition to wages, largely due to expanded programs implemented by the Michelle Bachelet, Sebastián Piñera and Gabriel Boric governments (2006-2025).

The cost of labor has risen with these reforms, though (as in the USA) not equally or “equitably” across all employment sectors, geographic regions or company sizes. These previous governments’ focus on expensive “climate change mitigation” measures and wind and solar energy (with its accompanying need for duplicative, expensive backup coal and gas electricity generation) impose on Chilean families, industries and businesses the most expensive electricity in Latin America.

Many heavy industry, manufacturing, and small and medium enterprises have therefore reduced their workforces, gone bankrupt or moved operations to China--taking jobs and benefits with them. This hardly improves overall health, prosperity and living standards of Chile’s families, and the additional tariffs also to harm additional sectors of its economy.

Sixteen years ago, in his foreword to Chile’s visionary and transformative free-market economist Hernán Bűchi’s book, The Economic Transformation of Chile, then-Policy Coordinator Christian Larroulet Vignau wrote that their country had escaped “the dark fate shared to this day by most Latin American countries.” Chile, he said, “has taken the lead in the continent’s economic development, and it seems unlikely for now that it will be ousted from that position.”

His forecast is still mostly accurate, but the road was not always smooth, and only this year was the succession of socialist-to-progressive governments replaced by more conservative, pro-business President José Antonio Kast. But all these administrations proved better than most of their counterparts in Latin America. Free trade, private pensions, private ownership of most resources and enterprises (except copper), targeted anti-poverty programs, and democratic rule remained constant policies throughout.

However, inequality among regional, ethnic and economic sectors remains (as they do worldwide), and activist groups continue to exploit those realities, to advance their ideologies and agendas, too often without much regard for facts or complexities. Their 12.5% tariff campaign is a good example.

The 12.5% tariff is a new surcharge, because the US-Chile Free Trade Agreement sets duties at zero for most of the affected goods. Libera and Ecocéanos say this is justified and necessary. 

If the NGOs want better worker wages and conditions, demanding high tariffs hardly achieves their goals

However, they interpret forced labor, exploited workers and unfair wages as including arbitrarily defined concepts like deceptive recruitment of workers, isolation in remote areas, excessive hours, improper deductions from wages, and dangerous working conditions that too frequently lead to injuries or deaths.

The Chilean government has questioned the NGOs’ claims, criticized them for failing to disclose their funding sources, and noted that the organizations and tariffs hurt the nation’s economy.

Few of these concepts are defined the same way in diverse locales, industries and specific jobs across the USA, at slow versus peak or harvest season, or under other specific circumstances. Citing them to justify imposing a new tariff is not persuasive, especially when comparing Chile to the United States.

Injury and death rates among divers and other workers in salmon farming could certainly be reduced if tougher workplace safety standards were implemented and enforced. However, the roughly 90 deaths in that industry over the past twelve years should be compared to more than 200 deaths (and some 29,000 injuries) in primarily underground copper mining, which was exempted from the tariff. (This toll covers large state-run and private mining operations, as well as small independent and artisanal mines.)

Extraction of lithium carbonate and hydroxide is done by injecting hot acidic water and extracting mineral-laden brines that are evaporated in surface ponds and treated in chemical processing plants. There are far fewer risks and thus few injuries and no deaths over the same 12-year period.

Higher US tariffs invariably mean higher US consumer prices for affected products--which translate into fewer product sales and thus reduced exports, hours and wages (plus increased layoffs) in the affected industries. If the NGOs want better worker wages and conditions, demanding high tariffs hardly achieves their goals.

It’s a shame the US Trade Rep succumbed to questionable NGO allegations

For a week in Chile in 2011, I discussed and debated climate change, renewable versus fossil fuels, the proposed (and ultimately canceled) HidroAysén hydroelectric energy project, and the adverse impacts of eco-imperialism and eco-colonialism on modern societies and impoverished communities alike.

I also critiqued North Face outdoor apparel founder Doug Tompkins’ ecological bona fides: for his own lavish lifestyle, while condemning modern living standards for others; for putting Deep Ecology ideology ahead of basic needs of the world’s poorest people; and over his ultimately successful scheme to buy land (and use failures to make payments on contracts to seize land from poor peasants)--to complete a closed Pacific-to-Argentina corridor across Chile above Patagonia.

A coastal highway and car ferry system now runs through the corridor, and Chile continues to improve and modernize the highway. But the corridor largely separates the magnificent Patagonia region from the rest of Chile, making travel much more difficult for the 290,000 people living in towns and villages south of the Tomkins corridor, and for tourists and other people trying to reach Patagonia from the north.

The tariff conundrum underscores what all too often results from even well-intended efforts by progressive-socialist-communist factions to impose their ideologies and schemes. They hurt those they supposedly intend to help … and entrench harmful bureaucratic governance for decades to come.

It’s a shame the US Trade Rep succumbed to questionable NGO allegations. President Trump should reexamine Libera-Ecocéanos’ false claims and reverse the July tariff ASAP.