Trump’s Promises

by Don Boudreaux on January 23, 2017

in Seen and Unseen, Trade

Here’s a letter to the Wall Street Journal:

You report that “President Donald Trump said Monday that the U.S. will impose a ‘very major’ border tax on companies that move overseas” (“Trump Promises ‘Very Major’ Border Tax on Outsourcers,” Jan. 23).

Let’s reword a bit and flesh out:

“President Donald Trump said Monday that the U.S. will impose a ‘very major’ tax on companies that move to, or are launched in, America.  By raising companies’ costs of leaving America, Pres. Trump thereby increases the risks that companies’ incur by setting up shop in America in the first place.  Likewise, Pres. Trump’s promise to penalize offshoring also increases firms’ costs of starting or expanding in America, for entrepreneurs and investors are now aware that they will have less flexibility to arrange for their firms to compete in global markets with maximum efficiency.

“Finally, with today’s promise, Pres. Trump also pledged to impose a ‘very major’ tax on American households who will pay, in the form of higher-priced and lower-quality consumer goods, the full costs of the increased operating expenses that will be the inevitable consequence of Mr. Trump’s protectionism.”

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

Trump’s economic ignorance is rivaled only by his strongman style.

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