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The Dangerous Virulence of Ignorance of Trade

Here’s a letter to the Wall Street Journal:


United States Trade Representative Robert Lighthizer’s defense of Trump’s tariffs in the face of the COVID-19 outbreak ranges from the economically ignorant to the internally inconsistent all the way to the Orwellian (Letters, March 21).

Mr. Lighthizer’s economic ignorance is displayed by his observation that “while imports of certain other medical products from China have declined since tariffs were imposed, that has been offset by increased imports of such products from other countries.” But offset by how much? In part? Completely? He doesn’t say.

The likely answer is “in part,” the reason being that we import more of these medical products from other countries only because tariffs deny us access to China’s lower-cost versions. Having now to pay higher prices means that we likely import fewer such products than we did before the tariffs. But even if we import the same amount now as before, we pay higher prices, and thus endure unnecessarily high costs of preventing and treating coronavirus.

Mr. Lighthizer’s inconsistency occurs when he asserts that “if there is one lesson to be drawn from this crisis, it is that dependence on other countries as the source of key medical products has created a strategic vulnerability for the U.S.” Really? He just reassured us in his previous paragraph that obstructing the receipt of supplies from one country is no problem because we get substitute supplies from other countries.

His Orwellianism is revealed by his claim, regarding the alleged “vulnerability” of supply chains, that “[b]y encouraging diversification of supply chains … President Trump’s economic and trade policies are helping to overcome that vulnerability.” How, pray tell, does artificially obstructing access to a low-cost supply chain and, thus, creating greater reliance on other, higher-cost supply chains ‘encourage diversity’ in ways that “overcome” supply-chain vulnerability? I find it impossible to believe that American companies, in whose interest it is to have access to an optimal combination of low-cost and robustly reliable sources of medical supplies, are so inept and short-sighted they must be led by tariffs to choose this optimal degree of low-cost and diversity.

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