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Tariffs are Taxes

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Here’s a letter to my determined protectionist correspondent, Nolan McKinney:

Mr. McKinney:

You argue that the heavy regulatory and tax burdens that we Americans today confront make us unable to “compete effectively against the Chinese.”

With respect, this argument for protective tariffs is among the strangest that I’ve ever heard – and I’ve heard many strange ones.

First, you’ve argued elsewhere that in our trade with China we Americans face an unfair disadvantage because China is allegedly a “non-market economy” – that is, because China has a disproportionately heavy amount of state involvement in its economy. So how can it be that we Americans, who operate in a market economy, suffer more burdensome regulations and taxes than do the Chinese who, you yourself insist, operate in a non-market economy?

Second, you’ve also applauded (and here I join you) Pres. Trump’s success at rolling back some regulations and reducing some taxes. And so given that Americans’ regulatory and tax burdens are lower today than they were before Pres. Trump took office, shouldn’t you and Pres. Trump be pushing to make tariffs lower?

Third and most fundamentally, tariffs themselves are a regulatory and tax burden. If, as you say, “our competitive ability is drained by the regulations and taxes we have to pay,” how would increasing the weight of this burden improve our competitive ability? You here make no more sense than would someone who, observing that a runner is slowed down by the bricks he is forced to carry, proposes to speed the runner up by demanding that he carry more bricks.

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

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