Here’s a letter to National Review:
Editor:
Henry Olsen’s two cheers for Trump’s tariffs are overwhelmed by three false assumptions (“Two Cheers for Tariffs,” February 7).
First, Mr. Olsen repeatedly describes tariffs as imposing costs “in the short term,” mistakenly implying that no such costs remain in the long run. By diverting labor and capital to produce outputs that we Americans produce at a comparative disadvantage, the costs of tariffs are long-lived and not limited to the short run.
Second, Mr. Olsen errs in assuming that a tariff-induced increase in manufacturing output will bring back lots of manufacturing jobs. It won’t. The reason is that the bulk of manufacturing-job losses is due to labor-saving technology and not to trade. For evidence, note that, compared to when China joined the WTO in December 2001, America today produces 13% more manufacturing output despite a 19% fall in the number of manufacturing workers. (And, by the way, also contrary to Mr. Olsen’s suggestion, it’s untrue that manufacturing wages are, on average, higher than are service-sector wages. In January 2025 the average hourly manufacturing wage was $34.64 while that in the private service sector was $35.73.)
Third, Mr. Olsen writes as if what he calls Mexico’s “massive trade surpluses” with the U.S. are a benefit that Mexico “reaps.” Facepalm. Here’s a pro-tip for your readers: Because in a world with more than two countries there is absolutely no reason – none, nada, zilch, zero, nil – to expect any pair of countries to have ‘balanced’ trade with each other, any time a pundit or politician mentions one country’s so-called “trade deficit” or “trade surplus” with another country, immediately know that that pundit or politician is so deeply ignorant about trade that he or she deserves none of your attention.
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
