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On the Economics of Trade, Lighthizer Is a Lightweight

Here’s a letter to the Wall Street Journal:


Robert Lighthizer is right that cutting tariffs on imports from China will do little to reduce inflation, but everything else that he asserts is wrong (“Biden’s China Tariff Cuts Would Hurt the U.S.,” July 19).

First, the tariffs aren’t justified by allegations of Chinese theft of intellectual property. As Dan Griswold and I explain in a 2019 Mercatus Center paper,* protectionists exaggerate the extent of Chinese IP theft as they ignore alternative and less disruptive means – most notably, arbitration through the W.T.O. – of reducing what theft there actually is.

Second, contrary to Mr. Lighthizer’s insistence, America’s trade deficit with China is a meaningless statistic. There’s no more reason to expect any pair of the world’s 195 countries to have ‘balanced’ trade with each other than there is to expect any pair of the world’s many companies to have ‘balanced’ trade with each other. That Mr. Lighthizer offers America’s so-called ‘trade deficit’ with China as a reason for punitively taxing Americans who buy imports from China reveals an ignorance of economics that alone suffices to disqualify his pronouncements on trade from being taken seriously.

Third, like all protectionists, Mr. Lighthizer ignores the gains from trade reaped by American consumers, as well as by American producers whose markets are expanded by trade. Sympathizing only with the relatively few workers and firms protected by tariffs, Mr. Lighthizer is coldly indifferent to the countless consumers whose real incomes are reduced by tariffs, and to the many other workers who lose particular jobs – and to the many other firms that lose markets – as a result of tariffs.

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

* Daniel Griswold and Donald J. Boudreaux, “How the United States Should Respond to China’s Intellectual Property Practices,” Mercatus Center Policy Brief, April 2019.