Writing in the Wall Street Journal, Samuel Gregg argues that “Tariff Men won’t help American workers.” Two slices:
Never mind that nearly 90% of such job losses during most of the “China Shock”—the 12-year surge in Chinese imports that began in 2000—are attributable to technological change and process improvement. Never mind that America recently ranked second in the world for manufacturing in value-added terms. Contrary to economic nationalist mantras, America makes plenty of “stuff,” it isn’t devoid of factories, and many former manufacturing towns, like Pittsburgh, have successfully upgraded their economies.
Highlighting these details hasn’t caused protectionists to reconsider their position. Such disregard is worrying, not least because the consequences of ring-fencing the U.S. economy with higher tariff walls are very predictable. Among those who would suffer disproportionately are the Americans whom Messrs. Trump and Vance wish to protect.
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In other words, the higher steel prices generated by the tariff increases meant that U.S. steel-using manufacturing firms had to cut costs to remain competitive in international and domestic markets. In many cases, these businesses chose to cut jobs to compete—again, meaning blue-collar Americans lost out.
A 10% tariff on all imports combined with a China-specific 60% tariff would magnify these effects on prices and employment throughout the economy. At a time when blue-collar Americans are already struggling with inflation, the last thing they need is a new administration hiking their daily expenses.
GMU Econ alum Dominic Pino dissects the good, the bad, and the ugly of Trump’s recent Bloomberg interview. Two slices:
The Bad
– Currency. Trump complained about the strength of the dollar relative to the Chinese yuan. “I think we’re in a very bad position,” he said. He didn’t exactly say what he would like to do about it, besides referencing the use of tariffs as a threat against China. For more on why it would be a bad idea to weaken the dollar, see this piece by Patrick Horan of the Mercatus Center.
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– U.S. tariffs’ economic history. Trump said that “Smoot-Hawley was after the Depression started.” That’s true, but it doesn’t mean the tariffs worked or that they didn’t make the Great Depression worse. The Smoot-Hawley tariff was partly responsible for sending Republicans into the electoral wilderness for years afterward. Instead, Trump pointed to William McKinley, who supported tariffs and thereby “made this country rich.” He sounds like he is imbibing too much from Robert Lighthizer, the pro-tariff trade representative from his presidency. For a better economic history of tariffs in the United States, read this piece by Erik Matson.
– Economic theory of tariffs. “Tariffs do two things. . . . Economically, it’s great. And man, is it good for negotiation,” Trump said. Economically, they are not great. They raise costs for Americans, fail to achieve their policy aims, and create opportunities for political corruption with special-interest carve-outs. Trump gleefully recounted his phone calls with Apple CEO Tim Cook about getting tariff relief; we should not want businessmen who have the president’s phone number to get better treatment from the government. It can be true that tariffs are useful negotiating tools, but those negotiation should be aimed at getting other countries to lower their trade restrictions. Today, neither party is pursuing new free-trade agreements, even though doing so would be in the U.S. national interest and would help the U.S. outcompete China. For some ideas on how to pursue free-trade agreements today, check out this piece by Kent Lassman and Ryan Young of the Competitive Enterprise Institute.
Bryan Riley is correct: “GOP trade platform would penalize forgotten Americans.” A slice:
The platform promises to rebalance trade, but trade is already balanced. During the first quarter of 2024, Americans sent about $1.7 trillion abroad, and we received $1.7 trillion in foreign payments. Protectionists want to ignore the $500 billion in foreign investment received so far this year, or even worse, they view foreign investment as a cost. Try telling that to the 2.2 million American manufacturing workers who are employed by foreign-based companies and who account for nearly 18 percent of our manufacturing workforce.
The GOP platform calls for new Buy American restrictions, but this is just warmed-over Bidenomics. The Peterson Institute calculates that Buy American measures cost US taxpayers $94 billion in 2017. Buy American policies also hurt US exporters when foreign countries inevitably retaliate by imposing “Don’t Buy American” requirements of their own.
The platform pledges to restore American manufacturing, but American manufacturing does not need to be restored. In 2023, real manufacturing output hit an all-time high. Manufacturing output can grow even higher if the government removes import barriers that restrict inputs used by American firms to compete in the global economy.
GMU Econ alum Jon Murphy tells why he’s skeptical of arguments for Pigouvian taxes and subsidies.
GMU alum Alex Nowrasteh continues to separate reality from rhetoric on the immigration front.
Above all, Biden’s continued candidacy implicitly discredits the main Democratic campaign theme: Democracy itself is on the line in 2024. Dire warnings about what will happen if Trump regains the White House can’t be both (a) valid and (b) consistent with knowingly running a flawed opponent against him.
The first principle and cornerstone of a free, just, and prosperous society is the recognition, inviolability, and protection of private property. The institution of private property—i.e., the right of exclusive possession, use, and disposition—is synonymous with the rise of civilization itself. No society has long existed without it. Indeed, there can be no freedom, no justice, and no prosperity without it. The acceptance, celebration, and protection of private property as an unalienable right is a reliable barometer of how much freedom, justice, and prosperity there is or will be in any given society.
