Trump has promised to impose stiff tariffs of up to 60% on China, as well as lower tariffs on other trading partners, and some members of the conservative intelligentsia are cheering him on. They make several arguments, but at least one is increasingly tenuous: that 19th century tariffs, which reached 35% in the 1890s, helped build the US into an industrial power.
A new paper from the National Bureau of Economic Research shows that tariffs probably did more harm than good. Using meticulously collected industry-level and state-level data, the paper traces the impact of specific tariff rates more clearly than before. The results are not pretty.
One core finding is that industries with higher tariffs did not have higher productivity — in fact, they had lower productivity. Tariffs did raise the number of US firms in a given sector, but they did so in part by protecting smaller, less productive firms. That was not the path by which the US became an industrial giant, nor is it wise to use trade policy to keep lower-productivity firms in business. Not only does it slow economic growth, it also keeps workers in jobs without much of a future.
These results contradict the traditional protectionist story — that tariffs allow the best firms to grow larger and capture the large domestic market. In reality, the tariffs kept firms smaller and probably lowered US manufacturing productivity.
The paper also finds that the tariffs of that era raised the prices for products released domestically. That lowers living standards, and should give a second Trump administration reason to pause, as he just won an election in which inflation was a major concern. The finding about inflation also counters another major protectionist argument: that tariffs eventually lower domestic prices because they allow US firms to expand and enjoy economies of scale. That is the opposite of what happened.
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Of course, defenders of Trump’s tariff proposals will question the results of this study. But they should not mistake residual uncertainty about this episode in US history as an argument for protectionism. History is always uncertain, and the pro-tariff account of the protectionists was a just-so story in the first place, lacking firm causal proof. Their version of events has been subject to a systematic examination, and is now all the harder to take at face value.
Tunku Varadarajan profiles Democrat Ruy Teixeira. Three slices:
Did you feel the joy on Tuesday night? Ruy Teixeira sure didn’t. He held his nose and voted for Kamala Harris, but he found her “distinctive policy ideas, to the extent she had them, questionable. I was definitely not a big enthusiast, but I voted for her anyway.” His “historical loyalty” to the Democratic Party meant that he couldn’t bring himself to vote for Donald Trump. “A lot of the obvious things that bother people about Trump bothered me too,” he says. Mr. Trump is “a bit too chaotic and unpredictable, and it seemed risky to me.” Mr. Teixeira didn’t buy into “all this baloney about how he’s going to institute fascism, but Trump did make me kind of nervous.”
Mr. Teixeira, 72, is a longtime Democrat who is distraught about the direction his party has taken. In 2002, he and John Judis published “The Emerging Democratic Majority,” which predicted a dominant future for his party. It didn’t come to pass. Two decades later he resigned from his fellowship at the Center for American Progress, a left-leaning Washington think tank that had become a cauldron of woke conformity, and joined the center-right American Enterprise Institute, of which I am also a fellow.
In a Zoom interview from his home in Silver Spring, Md., he says the ideological impulses that made his old workplace intolerable were the same forces that “consigned Kamala Harris and the Democrats to defeat in the election.”
“Millions of people,” he says, “swallowed their nervousness about Trump and said, ‘Well, he’s unpredictable. Maybe a bit of a risk. But I don’t want to see another four years of the Biden-Harris administration.’ ” These “normie voters”—working-class Americans who aren’t “enclosed in the professional-class bubble”—cost the Democrats the White House and the Senate majority.
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At the same time, working-class voters are “not on board with the Democrats’ climate catastrophism,” Mr. Teixeira says. “They are not anti-fossil-fuels the way that most Democrats seem to be these days.” Climate shibboleths, “a matter of almost religious faith among dominant elements of the Democratic Party,” have distorted policy priorities to an extent that makes voters angry.
“They think this is not good. They see that the whole clean-energy-transition obsession has not been good for capitalism writ large,” Mr. Texieira says. “The most important thing Democrats should be for is, basically, prosperity, for upward mobility, for dynamic economic growth, for getting rid of some of these stupid regulations that prevent people from doing stuff.”
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The party also needs to “give up on this equity baloney and start talking about equal opportunity, and fairness, which is what people really believe in.” He pleads: “Go back to Martin Luther King. He had the right idea. You ought to judge people by their character, not the color of their skin.” He cites Bill Clinton, who had “a lot of great instincts on a lot of this stuff. An important aspect of his career is that he ran and won in a place like Arkansas. And that’s really different from running and winning in California, or New York, or Illinois.”
GMU Econ alum Dominic Pino writes intelligently about the outcome of this past Tuesday’s election. A slice:
I don’t believe that Kamala Harris lost because American voters are racist and sexist. They voted for Barack Obama twice in huge numbers not that long ago, and there are more women in Congress and more women as governors today than ever before in U.S. history. Americans vote for candidates who are good at politics and share their values, regardless of race or sex.
But if I did believe that American voters were racist and sexist, and I wanted to win the presidential election, I would not have nominated a non-white woman in that election.
I especially would not have replaced the white man who is the incumbent president, in an election against a white man, with a non-white woman less than four months before that election.
Chris Edwards offers some budget-cutting suggestions to president-elect Trump.
Thomas Berry and Ethan Yang decry the banana-republic practice of civil asset forfeiture.
