These days, the label “globalist” is a pejorative meant to insinuate that a person is more concerned about international corporations than about his fellow American citizens.
Now, admittedly, I support nearly unlimited trade, no matter what other nations do. It’s mostly because I love America. “Hey, those Chinese communists are killing us with high tariffs … maybe we should do the same thing to our own citizens!” sounds like a counterproductive idea wrapped in a false choice. Harming hundreds of millions of consumers to try and save a handful of unproductive jobs, no matter how good it feels, doesn’t put America first.
Donald Trump, a man who campaigned on protectionist rhetoric (he was not alone) says he can finagle better trade agreements for the United States. Honestly, if he’s using the threat of tariffs as a cudgel to attain those deals, I don’t really care if Justin Trudeau’s feelings are hurt. I’m fine with the “We’re America, B-tch” Doctrine as long as it’s actually good for America.
Judging from his rhetoric, though, it seems the president believes protectionism is preferable to deals that lower barriers all around. His public position on trade — one of his only enduring political positions — is that jobs and industries can be saved using tariffs.
Take Trump’s top trade adviser, Peter Navarro, who lays his two basic concerns in a recent New York Times article: “First, trade must be not only free but also fair and reciprocal.”
“Fair trade,” once used predominately by progressives, is a neologism without meaning. It allows a person to oppose complex agreements for a litany of reasons. “Fair” is elastic and ambiguous, which is why it’s so popular with adolescents.
The billions of people in developing nations who work tedious menial labor jobs probably don’t find it “fair” that we Americans use the savings we gain from their work to build our unprecedented wealth. Is it fair that some countries sit atop vast amounts fossil fuels or prime farmlands while others sit on arid or barren land? Let’s hope trade doesn’t get “fair” for us any time soon.
When Navarro writes that G7 nations’ trade practices “contribute to America’s more than $500 billion annual global trade deficit in goods and services,” he means American citizens, using their free will, purchased goods and services they prefer from other countries. Sometimes these products were completely foreign-made, sometimes they are partially foreign-made — German car companies, for instance, are invested in more than 250 plants in the United States — but Americans always get something in return for their money. As economist Milton Friedman argued long ago, the real gain from international trade isn’t what we export but what we import.
More importantly, one reason the United States is running a trade deficit is that we’re wealthy and larger and can spend more on foreign-made goods and services than others can spend on U.S.-made goods and services. For example, China, which many Americans wrongly believe is an economically comparable power, boasts of $6,894 GDP per capita compared to our $52,194.
Navarro correctly claims that tariff on cars made in Germany and elsewhere in the European Union are subject to a 2.5 percent tariff, while the European Union tariff on American cars is four times as high. “No wonder,” says Navarro, “Germany sells us three cars for every one we export to Germany.”
Well, once we consider that Germany has a population of around 83 million and ours is more than three times that number, per capita, it makes a lot more sense. But protectionists needs to exaggerate the unfairness to allow us to play victims. In any event, if our trading partners are behaving as poorly as Trump claims (and that’s arguable) what would American consumers gain from paying higher taxes? Would the Germans buy more Fords?
“Second,” writes Navarro, “President Trump reserves the right to defend those industries critical to our own national security.”
There’s isn’t even a good fake economic argument for steel tariffs. A vast number of industries and workers rely on steel, while few work in the steel-making industry. So the administration wants to impose costs on aluminum and steel imports — far higher than the average tariffs imposed on the U.S. for the same — as a matter of national security.
Yet steel isn’t technologically sensitive nor uncommon. A person needs to suspend disbelief and discard history to believe the United States wouldn’t be able to quickly ramp up steel production if, for some incredibly strange reason, Canada and Brazil felt the need to undermine our national interests.
You hate the elites, I get it. But it’s worth noting that while economists shouldn’t be treated as infallible seersayers, a recent Reuters survey of 60 found that 80 percent thought tariffs would do harm while 20 percent said they would have little effect. Not one said they would benefit the economy.
Many voters blame international trade agreements for trends that are largely a product of automation or increased production. It’s a story as old as the division of labor. Politicians pretend to show their empathy for the victims of creative destruction by demanding fairness. But actually, most often the underlying case for spurring a trade war isn’t even parity, but rather the promise of preserving unproductive jobs at home. This ends up distorting markets, killing new jobs, and ignoring reality.
On top of it all, protectionism is cronyism. It’s top-down control. It’s the state picking winners and losers. It’s a tax on the vast majority of Americans. Tariffs are all the things conservatives used to claim to be against.