If Donald Trump fails to re-take the White House in November (and then for real in early 2025), his legacy may quickly devolve into a matter for historians, not live politics. After people calm down and the culture war stuff recedes (once again, if allowed by events), what will be left to argue over are a half-dozen major issues, which include war, mass migration … and tariffs.
Tariffs have long been Mr. Trump’s major hobby horse; he gets excited about 100 percent levies. The whole business about the “bloodbath” quote was his insistence that American auto industry will be destroyed if Trump himself doesn’t get the chance to erect ultra-high tariffs against automobiles from Mexico.
Trump looks at tariffs on foreign goods as harming foreign nations and helping us, the Americans.
But it is worth noting that economists from Adam Smith and David Ricardo onward have regarded tariffs as chiefly harming consumers within the country that erects them.
At Reason you can read Veronique de Rugy make the classic free-trade case, anew, in “No, Trump-Style Tariffs Do Not Grow the Economy.” If Frédéric Bastiat didn’t convince you, maybe de Rugy will.
But something’s missing. Surrounding Trump’s talk against free trade in general and China in particular there was always another element that neither Bastiat nor de Rugy emphasize: free-trading with China helps Chinese and Americans, sure; gotcha — but it also helps the Chinese state, and its ruling Communist Party.
“Trump is an avowed restrictionist on both immigration and trade,” de Rugy writes. But both unchecked immigration and free trade present problems not economic so much as political. It’s about real bloodbaths, actual warfare, not metaphorical ones.
Even if Trump misdiagnosed the domestic economy, he saw problems with China perhaps more clearly than anyone else.
This is Common Sense. I’m Paul Jacob.
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8 replies on “Trump’s Tariff Question”
Trump also said that the purpose of tariffs is to not have to use them to level the playing field. To use the threat to remove the widespread tariffs on American goods in other countries, as well to even the competition where other governments heavily subsidize their manufacturing which then can sell substantially cheaper than American companies that operate without that financial subsidy.
Trade is supposed to be between equals. Trade with Mexico and with China is neither free nor fair. We are enriching China and Mexico at the cost of our own domestic economy and national sovereignty. The argument that tariffs only hurt consumers can also be made about domestic taxes. They harm consumers, who bear the burden of those taxes. Businesses pass the expense of taxes on to consumers, in the form of higher prices.
Government takes trillions of dollars out of the domestic economy. Americans who can’t earn a living can’t pay taxes and they can’t buy goods from China, no matter how cheap (and flimsy) they are. I’m reminded of the ‘luxury tax’ Democrats passed decades ago. They figured they’d tax the rich who bought those goods. Instead, these taxes hurt the workers who made a living manufacturing and selling these goods. Consumers simply stopped buying their products as long as the tax remained in effect.
There are no equals. The advantages of trade accrue to both parties no matter the disparity. Were trade limited only to “equals” (in what? wealth? health? beauty?) almost no trade would exist and we would be primitives.
Only a technical equality can exist: neither side coerces the other.
Trade works to mutual betterment regardless of status.
Adding to Tim’s remarks, I offer a link to an explanation of the economic motivation for all trade at all levels. Please note that equality has nothing to do with it.
Trump is not a founding father, although many of his sycophants would have you believe so.
But he is a far more attractive bag of tricks than the Commies and First Resident Biden.
So as in 2016 and 2020 I voted for him b/c he wasn’t HRC or Joe Biden.
Unlike my younger brother, God rest his soul, who would craw thru broken glass for him.
PS. I like the, “Dates in History” notes if you have the room.
Exploiting moral panic isn’t an indicator of particularly clear seeing of anything except an opportunity to exploit moral panic.
“free-trading with China … also helps the Chinese state, and its ruling Communist Party.”
And individuals are free to take that into consideration when they make purchasing decisions. Why should the government stick its nose in?