Here’s a letter to The American Conservative: (I thank Bryan Riley for the clip from 2016 of Rubio.)
Editor:
Sen. Marco Rubio’s (R-FL) latest attempt to defend punitive taxes on Americans’ purchases of imports from China is a swollen dog’s breakfast of errors, illogic, and forgetfulness (“Trump Is Right: We Should Raise Tariffs on China,” May 9). Here’s a sample of each.
Error. The addition of 2.1 million jobs following the enactment of Trump’s tariffs in 2018 does not, contrary to Sen. Rubio’s assertion, show that opponents of the tariffs were mistaken. Because the economics of trade are clear that trade policy has no effect on the overall number of jobs in an economy, no competent advocate of free trade has ever predicted that tariffs will alter trends in overall employment. Following the imposition of Trump’s tariffs, the creation of the 2.1 million new jobs mentioned by Sen. Rubio took 12 months. Yet in the 12 months immediately preceding the imposition of those tariffs the number of new jobs created was, at 2.2 million, virtually identical – just as economic theory predicts.
Illogic. Playing down the worry that higher tariffs will raise prices for consumers, Sen. Rubio asserts that “American producers will step up to fill the gap.” In this he’s partly correct; those higher prices will indeed prompt American firms to increase their production of protected goods (although not by enough to bring prices down to pre-tariff levels). But the senator illogically supposes that the diversions of more American resources into protected industries are free. In fact, these resources must be diverted away from other American industries – causing prices of non-protected goods and services to rise. (Note: Don’t suppose that the solution is to protect all industries. Because many industries aren’t subject to import competition – think, for example, construction and restaurants – using tariffs to raise the prices of all goods that are subject to import competition will only cause much larger contractions of those industries not subject to such competition.)
Forgetfulness. Guess who said the following during a 2016 debate with among others, Donald Trump: “I think we need to be very careful with tariffs and here’s why: China doesn’t pay the tariff. The buyer pays the tariff. If you send the tie or a shirt made in China into the United States and Americans go to buy it at the store and there’s a tariff on it, it gets passed on in the price to the consumer. So I think the better approach, the best thing we can do to protect ourselves against China economically is to make our economy stronger.”
Give yourself an A+ if you guessed “Marco Rubio.”
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
