Here’s a letter to National Review:
Editor:
Reporting on Pres. Trump’s address last night to Congress, Brittany Bernstein and Audrey Fahlberg quote these lines from his speech (“‘We Have Been Ripped Off’: Trump Defends Sweeping Tariffs in Address to Congress as Trade Wars Kick Off,” March 4):
“We have been ripped off for decades by nearly every country on Earth and we will not let that happen any longer,” Trump said.
“Other countries have used tariffs against us for decades and now it’s our turn to start using them against those other countries,” he said, pointing to the European Union, China, Brazil, India, Mexico and Canada.
Unfortunately, Ms. Bernstein and Ms. Fahlberg missed the opportunity offered by Trump’s words to expose two foundational fallacies that surround his protectionism.
One fallacy is that tariffs are used against foreign countries. In fact, tariffs are used against the citizens of the government that imposes the tariffs. Canadian tariffs, for example, are taxes on Canadians’ purchases of imports, and U.S. tariffs are taxes on Americans’ purchases of imports. And so while foreign exporters do suffer when the U.S. government raises tariffs, the bulk of the suffering is by Americans – by American families who pay higher prices for food, clothing, and other household goods, and by American producers who pay higher prices for raw materials and intermediate products used in production here in the U.S.
Moreover, these higher prices at home are by design: U.S. tariffs will not cause American manufacturing and agricultural outputs to rise unless these tariffs increase the prices that Americans pay for these outputs. When Trump and other protectionists deny that Americans will pay higher prices as a result of tariffs, they are either lying or displaying frightening economic ignorance.
The second fallacy is the frequently heard excuse that Trump’s tariffs are bargaining chips to compel other governments to step up actions to stop the flow into America of illegal drugs. Yet last night, Trump himself identified other countries’ tariffs – which, again, ‘rip off,’ not Americans, but their own citizens – as the principal justification for his tariffs.
In short, Trump insists that, because other countries use tariffs to rip off their citizens, he’s going to use tariffs no less harshly to rip off Americans.
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
