You probably shake your head in wonder at the stupidity of the Philadelphia politicians who imposed this tax on the soft drink industry: Pepsi is laying off up to 100 workers in Philadelphia and blaming a 2-month-old soda tax.
Distributors and grocery stores are likely to follow: Philadelphia’s Soda Sellers Say Tax Has Reduced Sales by as Much as 50%.
If you understand the Philadelphia political folly, but still support protectionist tariffs in the name of preserving U.S. jobs, intellectual consistency demands that you explain federal import duties on sugar in the same terms: U.S. Trade Policy Gouges American Sugar Consumers.
According to a 2006 study by our own Commerce Department, “For each one sugar growing and harvesting job saved through high U.S. sugar prices, nearly three confectionery manufacturing jobs are lost.”
One-fifth of one percent of U.S. farms are the beneficiaries of this protectionism, and consumers pay around $1.3 billion annually to support them – not including the cost of federally mandated, corn-based ethanol in our gasoline. Which brings us to another sugar related protectionist tariff: Brazilian (cane-sugar) ethanol attracted a 54 cent a gallon tariff until 2012, while we simultaneously subsidized corn “food as fuel“, raising prices on everything from tortillas to steak.
Claims by the sugar industry that Mexico is selling sugar below cost are ludicrous, Mexico is selling it above average world cost. That, and the Brazilian tariff, is what “fair trade” means to U.S. farm lobbyists and the Trump administration.