Here’s a letter to USA Today.
Editor:
Defending Pres. Trump’s aluminum tariffs, Peter Navarro focuses exclusively on the effects of these tariffs on U.S. aluminum producers (“Trump tariffs will save American jobs and level the playing field,” Feb. 28). He points out what no serious defender of free trade denies, namely, that punitive taxation of American purchases of aluminum imports prompts Americans to buy more American-made aluminum and, thus, causes U.S. aluminum production to increase.
But rehearsing only what’s obvious to a kindergartner is a poor defense of protectionism. Your readers should be troubled by Navarro’s failure to look beyond the obvious by asking such questions as:
– How much will production fall in industries that use aluminum as an input? U.S. producers of automobiles, aircraft, and power lines heavily use aluminum, as do U.S. construction firms. And according to the Beer Institute, “aluminum is the single largest input cost in American beer manufacturing.” Aluminum is also, of course, used to make cans for non-alcoholic beverages. The tariff-induced higher prices of aluminum will necessarily raise the costs of production in these and other American industries. What reason is there to believe that the additional tariff-induced production of aluminum will be worth the tariff-induced reduction in the outputs of aluminum-using industries? Navarro doesn’t say because he doesn’t ask.
– As the tariffs draw more resources into U.S. production of aluminum, from where will these resources come? They must come from somewhere. What reason is there to believe that the additional tariff-induced production of aluminum will be worth the tariff-induced reduction in the outputs of those industries that lose workers and other resources to American aluminum producers? Navarro doesn’t say because he doesn’t ask.
– If Navarro is correct that legions of foreign countries are shipping subsidized aluminum to the U.S., wouldn’t someone committed to an “America First” agenda want to encourage these shipments? After all, such subsidies mean that foreign governments are putting America First by taxing their citizens in order to increase our access to a valuable metal. Shouldn’t we welcome these subsidized imports and applaud foreign governments for their embrace of Pres. Trump’s America First agenda? Were he a serious thinker, Navarro would be leading us in cheering these foreign subsidies. Alas, a serious thinker Navarro certainly is not.
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
