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This note is to a college student who often writes to berate me for my failure to appreciate the economic genius of his hero, Donald Trump.
Mr. Jake Ricci
Jake:
Thanks for your e-mail. You write that Trump’s protectionism “reflects his intuitive grasp of optimal tariff theory.”
I disagree strongly, for two reasons. First, because Trump exhibits no grasp, intuitive or otherwise, of basic economics, it’s impossible to believe that he intuitively grasps a concept requiring an understanding of more advanced economics.
Second and far more importantly, the optimal tariff (if and when the rare conditions for its successful use in reality exist) is a tool for increasing the amount of imports a country receives in exchange for any given amount of its exports. As Richmond Fed economist Tom Humphrey explains [2], a country that imposes an optimal tariff “renders its imports cheaper and its exports dearer such that it obtains a larger quantity of imports per unit of exports given up.”
This outcome is the opposite of what Trump routinely demands. Every syllable barked by him and his trade advisors makes clear that their goal is nothing more sophisticated than the unvarnished and long-discredited mercantilist quest for domestic citizens to export as much as possible and to receive in exchange as few imports as possible.
Trump wants to make you rich by reducing your access to goods and services. Good luck with that.
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