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Taking Us to the Cleaners: One More Open Letter to Trump

23 January 2018

Mr. Donald Trump
1600 Pennsylvania Ave., NW
Washington, DC 20500

Mr. Trump:

I wasn’t joking yesterday when I wrote to you that my washing machine is broken and that a repairman was to come today to fix it.  Well, the repairman came.  He tells me that the difficulty and monetary cost of fixing the machine are prohibitively high.  He recommends buying a new washer.

So, a new washer will be bought.

Because of your punitive tax on Americans who buy new washers assembled outside of the United States or Canada, the price that I’ll pay for the new washer will be higher than it would have been without this punitive tax on me and other Americans who buy new washers.  (After all, raising the prices of new washers sold in the U.S. is the whole point of your tariff.)  And of course the prices of new washers rose the moment the tariff was announced: when announced, the scarcity of new washers in the U.S. immediately rose relative to demand.

I don’t know – no one does – the exact amount by which the price to be paid for the new washer will be higher than the price that would have been paid in the absence of your punitive tax on buyers of new washers.  But, again, that price will certainly be higher.  This fact means, in turn, that some money that I would have spent or invested elsewhere will now not be spent or invested elsewhere.  I cannot say just where, but simple arithmetic reveals the truth of my claim.  Perhaps a restaurant meal that I would have bought will go unbought as I dine in one evening instead of dining out.  Perhaps one night I’ll watch an older movie on Netflix rather than go to see a new movie at a theater.  More likely, in my case, my savings account will have fewer dollars in it than otherwise – which means that my bank will have fewer dollars to lend to someone who wants to buy a new Ford pick-up truck, or lend to an entrepreneur who needs additional liquidity to keep his small business afloat.

Because of your tariff, some businesses somewhere in the American economy will suffer unnecessarily lower demands for their outputs, or get fewer dollars for investment.  Because of your tariff, some outputs somewhere in the American economy will be lower than otherwise.  Because of your tariffs, some people will lose, or not get, jobs that they otherwise would not lose or would get.  Because of your tariff, some other people will not get pay raises that they would otherwise have gotten.

And, thanks to you, the cost to all of us Americans of laundering our clothes will be higher.

Yet I don’t doubt that you and your troupe of crony-capitalist protectionists will bleat about how your punitive taxes on American consumers will make Americans more prosperous.

It’s preposterous, sir – and disgusting.

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