This Christmas season we probably ate too much candy. Walter Williams in a recent column reminds us why so much candy is now produced in other countries. It is another example of why many American companies decide to leave the United States.
Chicago, he reminds us, used to be America’s candy capital. It isn’t anymore. Brach’s used to employ about 2,300 Americans. Most of their jobs now can be found in Mexico. Ferrara Candy Company also moved much of its production to Mexico.
You might immediately guess that the reason for these moves is the fact that wages in Mexico are lower than in this country. That is part of the reason, but there is more here than just the difference in wages.
Life Savers has been manufactured in America for 90 years. Now they moved to Canada, where wages are similar to American wages. So why did they move? The cost of sugar is lower in Canada than in the U.S. By moving, they saved about $10 million a year in sugar costs.
There are all sorts of government-imposed costs that eventually push American companies overseas. One obvious one is the high corporate income tax. But others are things like sugar restrictions that force CEOs to consider relocating their business.
The sugar lobby has successfully convinced Congress to impose restrictions on foreign sugar. These take the forms of tariffs and quotas. American sugar producers benefit because they can charge higher prices and achieve higher profits. But companies that use sugar (like these candy manufacturers) have to pay higher prices.
Donald Trump wants to prevent American companies from leaving the United States. If he and Congress are to be successful in keeping companies here, they need to look at all the reasons companies leave. Our high corporate income tax and higher wages are just two of the reasons. Tariffs and quotas (on products like sugar) are another reason.