Should We Practice Reciprocal Vandalism?

by Don Boudreaux on July 21, 2019

in Myths and Fallacies, Trade

Here’s another letter to “proud Trump man” Nolan McKinney:

Mr. McKinney:

Unpersuaded by my earlier letter critical of Steve Moore’s reasons for supporting Trump’s tariffs you ask for another “example of how [Steve] stumbled in his logic.”

I’m happy to oblige. But before I do, I add for the record that during the debate Steve and I agreed on several points. He’s not fully on board with Trump’s protectionism. But Steve is on board with some of it, which in my view is too much of it.

When explaining to the FreedomFest audience how Pres. Trump persuaded him to soften his opposition to protectionism, Steve said that, at the president’s urging, he looked at the record and discovered that China and other countries sometimes impose higher tariffs on imports that they receive from America than Uncle Sam imposes on imports which we receive from abroad.

First, it’s surprising that this reality is surprising. It’s common knowledge among those of us who follow trade that other governments sometimes impose tariffs higher than are those imposed by Uncle Sam.

Second and more fundamentally, differentially higher rates of tariffs abroad are no more a reason to raise our rates of tariffs than are differentially higher rates of vandalism abroad a reason for us to raise our rate of vandalism. It’s a long-established and obvious point among economists, but apparently it’s one that cannot be too-often repeated: When foreign governments damage their economies by protecting politically potent domestic producers with tariffs, it’s utterly illogical to conclude that we are somehow made better off by damaging our economy with our own tariffs.

Tariffs degrade an economy’s efficiency, creativity, and dynamism. And they constrict the freedom of the people whose governments impose them. I’m at a loss to understand how learning that other countries unnecessarily degrade their economic efficiency, creativity, and dynamism – and their citizens’ freedom – causes someone to conclude that we should follow suit.

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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