My intrepid Mercatus Center colleague Veronique de Rugy isn’t surprised that Trump’s
protectionism scarcityism is harming many U.S. producers who once fancied that they’d benefit from these U.S.-government-imposed penalties on American consumers . Here’s her conclusion:
The bottom line is that a government that’s powerful enough to protect some producers against foreign competitors is powerful enough to protect other producers — protection that winds up inflicting net damage on most or even all producers. As for the 6.5 million workers in America’s steel-consuming manufacturing plants (including Whirlpool’s), they can be added — along with all consumers — to the laundry list of long-suffering victims of cronyism that the Washington, D.C., swamp has left out to dry.
An immediate loss to Americans from higher tariffs is higher prices for imports and their domestic substitutes. A tariff is a tax, and the new higher tariffs erase at least part of the favorable effects of the earlier reduction in corporate and individual taxes. Commerce Secretary Wilbur Ross has claimed that prices will rise by negligible amounts, but an extra $5,000 per year for a car is not negligible for many Americans.