Here’s a letter that I sent on March 9th to the New York Times.
Editor:
Rep. Chris Deluzio (D-PA) calls for the impossible: a “smart” use of tariffs to strengthen the U.S. economy (“I’m a Rust Belt Democrat From a Swing District. Anti-Tariff Absolutism Is a Mistake.” March 7). All such tariffs are inherently stupid.
By restricting Americans’ access to low-cost goods and services, U.S. tariffs prevent Americans from stretching their incomes as far as possible. Of course, tariffs enrich owners and workers in protected industries, but they do so in exactly the same way as hurricanes enrich owners and workers in the construction industry. In both cases – because of the net loss of resources – the overall wealth of the nation is reduced, implying that the higher incomes earned by the lucky few who benefit from the natural disasters that are the hurricanes, and from the manmade disasters that are the tariffs, are overwhelmed by the victims’ losses.
Rep. Deluzio’s apparent ignorance of this basic reality about tariffs is matched by his mistaken ‘facts.’ He’s simply wrong, for example, when he complains of “bad trade deals” and of “a chronic trade deficit that deindustrialized our nation.” The nation has not been deindustrialized; industrial capacity is today larger than it has ever been, and is 12% larger than it was when China joined the WTO in December 2001, 66% larger than when NAFTA took effect on January 1, 1994, and 146% larger than when America last ran an annual trade surplus, in 1975.
Nor is it true that Vietnam has practiced “wage suppression” in a beggar-thy-neighbor move to take manufacturing jobs from the U.S. Between 2019 and 2023 (the latest year for which I can get data), the average inflation-adjusted manufacturing weekly earnings in Vietnam rose by an astonishing 38 percent.*
It’s easy to make a case for protectionism by ignoring economics and reality. But if these phenomena are taken into account, protectionism is exposed as being a farce grounded in questionable logic and facts.
Sincerely,
Donald J. Boudreaux
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030* Data on average weekly manufacturing earnings in Vietnam are here. I converted these earnings into constant currency values using data found here.
