Here’s a letter to The Hill.
Editor:
Pres. Trump said that “China probably will eat those tariffs” (“Trump says China ‘probably will eat those tariffs’,” April 29).
So the president believes that the tariffs will be ‘eaten’ by China – meaning, he believes the tariffs won’t result in higher prices in America of Chinese goods. If he’s correct, these tariffs will do nothing to protect American producers from Chinese imports. The reason is that tariffs can protect American producers from Chinese imports only by raising the prices of Chinese goods in America, for only by raising the prices of Chinese goods in America will American buyers be incited to shift their spending from Chinese goods to American-made goods.
But the president also believes that his tariffs will further increase American manufacturing and reduce U.S. trade deficits – meaning, he believes the tariffs will result in higher prices in America of Chinese goods and, thus, won’t be ‘eaten’ by China.
The confusion is gargantuan. Mr. Trump’s trade policy is plagued by more than deep ignorance of economics; it suffers also from mind-boggling logical contradictions. This fact alone is reason enough to dismiss out of hand those tariff apologists who assure us that Mr. Trump is a singularly ingenious trade-policy strategist.
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
