No, Mr. President, Tariffs Are Not ‘The Greatest’

No, Mr. President, Tariffs Are Not ‘The Greatest’

Bailouts for industry and new taxes on consumers is not a winning strategy.
David Harsanyi
By

“Tariffs are the greatest!” tweeted Donald Trump this morning. “Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that—and everybody’s talking! Remember, we are the ‘piggy bank’ that’s being robbed. All will be Great!”

Many Trump supporters assure me that the president is only interested in brandishing the threat of tariffs as cudgel to attain fairer international trade deals. This, I’m told, is because the United States— a nation of immense wealth, whose gross domestic product is far larger than that of its closest competitor (despite a fraction of the population), and whose people enjoy the kind of high wages and living standards that allows them to buy things cheaply on the open market and, in turn, create dynamic domestic industries with the savings —is the victim of international trade.

But there’s a real disconnect between this theory and Trump’s words and actions. What, as the president suggests, is the upside for American workers if these countries don’t agree to “fair” trade deals with the United States? How are tariffs—a tax, by definition—still “Great”? Is taxing consumers without any genuine corresponding benefit great? Is endangering businesses that rely on cheaper material to keep employment numbers up and costs down great? Is closing off American goods to markets that engage in similar counterproductive policies great?

Or is just a matter of exacting revenge for the supposed injustice of all those affordable 70-inch 4k televisions? It would be difficult to quantify what national retribution is worth — maybe it’s a lot, I don’t know — but the upside of temporarily preserving a few dying jobs while inhibiting the self-sustaining ones of the future will certainly be high.

Now, I get that these arguments have little political efficacy. You’re not going to allay working-class anxiety by pointing out that capital-account surpluses matter more than trade deficits or that productivity is realigning the workforce. If you mention creative destruction, you’re going to lose elections. Instead, politicians on both Right and Left love to perpetuate myths about our dying “manufacturing,” then promise to “bring back” Third World jobs. After all, it’s easier to blame foreigners than a machine.

It’s true that many Americans suffer from the displacement caused by increased productivity and better technology. Their suffering, although not new to history, is real and shouldn’t be ignored. But placating voters with mercantilist economic policy won’t make their lives better, either. Just as raising the minimum wage to make voters feel better only hastens the automated kiosk, tariffs can’t transform the rules of economics because you feel strongly it should.

Trade wars have many victims, and few suffer more than those with lower incomes, who generally benefit the most from the low-cost consumer goods that free trade affords them. Tariffs are a regressive tax in a number of ways. But consumers, you’ll notice, are rarely mentioned by the protectionist. Nor are the thousands of companies that rely on affordable materials to produce their products. That’s because, in politics, middle-class shoppers and washing-machine manufacturers are a lot harder to romanticize than the steel worker.

In many ways, Trump’s trade rhetoric resembles the binary economic arguments of the progressive Left: soothing to the ears, a catastrophe in the real world. Framing trading partners as “foes,” for example, is misleading. That’s not because trade isn’t often a competition, but because it’s almost always mutually beneficial. Decry globalism all you like, the world’s economies are intertwined in ways that make trade wars mutually destructive.

Trump has a long history of praising those tariffs, not only as a tool for negotiating, but as a means of protecting American workers. Protectionism is the president’s most enduring and steadfast ideological position, and it goes back decades. After announcing tariffs of 25 percent on steel imports and 10 percent on aluminum imports, for example, the administration didn’t say it was merely negotiating a better deal, it claimed they had taken “good steps towards fixing predatory practices that hurt workers & cheat companies that produce in US.”

It should be said that one of the president’s great accomplishments might have been transforming the anti-trade Left into a bunch of (no doubt, temporary) free-trade advocates. That makes this an ideal opening for Congress to take back some its constitutional power on levying tariffs. That’s something it will never do.

Instead, as The Washington Post reports, the White House plans to extend $12 billion in “emergency aid” to farmers caught up in the escalating trade war — a self-destructive, completely avoidable emergency. Americans aren’t only going to foot the bill for trade wars by paying more in taxes, both in tariffs and in subsidies, but a Republican White House is now bailing out industries that are suffering the consequences of trade wars that we allegedly can’t lose. All will not be “Great.”

David Harsanyi is a Senior Editor at The Federalist. He is the author of the forthcoming book, First Freedom: A Ride Through America's Enduring History with the Gun, From the Revolution to Today. Follow him on Twitter.

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