Here’s a reply to a commenter at my Facebook page.
Mr. Fioru:
Like many others who try to justify Trump’s trade ‘policy,’ you describe his tariffs as “a negotiating tactic,” allegedly imposed in response to other countries’ trade restrictions. I find this attempted justification incredible.
Forget the inconsistencies that infect Trump’s own various claimed justifications for raising tariffs. (These inconsistencies are revealed brilliantly by Mike Munger.) Forget that, because foreign trade restrictions inflict most of their harm on the citizens of the foreign countries imposing them, it is ethically dubious for our government to impose costs on us (which is what U.S. tariffs do) in order to pressure other governments to treat their citizens better. (What happened to ‘Put America First’?) Forget that Trump refuses to use a tried-and-true means of negotiating reductions in trade restrictions – namely, the multilateral trade-negotiation possibilities, and dispute-resolution facilities, provided by the WTO.
Instead, recognize that for a negotiating tactic to be worthwhile, the goal of the negotiator must, at a minimum, be achievable. Trump’s goal is not.
To the extent that any clarity can be discerned amidst the fog of Trump’s trade-policy pronouncements, he’s most obsessed with eliminating America’s so-called “trade deficits” with individual countries – such as, for example, the U.S. “trade deficit” with Canada. He thinks that U.S. “trade deficits” with individual countries are both meaningful and caused by foreign unfair trade practices. But on both counts he’s wrong. In a world of nearly 200 countries, these so-called “trade imbalances” are completely natural. It would be extremely bizarre if they did not occur. It’s practically impossible for any country to export to every individual country with which it trades the same amount as it imports from that country.
The very fact that Trump not only believes that economic meaning exists in an economically meaningless concept (“bilateral trade balances”), but believes also that it’s within the power of governments to arrange for their countries each to achieve the impossible outcome of having ‘balanced’ trade with the U.S., is sufficient to prove that the president is utterly clueless about the economics of trade.
If you’re correct that Trump’s tariffs are indeed “a negotiating tactic,” he’s negotiating in economic ignorance to achieve an impossible outcome. And because reality isn’t optional, when that impossible outcome fails to materialize, Trump will feel justified in further hiking U.S. tariffs, convinced by his economic ignorance that he simply must become an even tougher negotiator.
Such ‘negotiation’ will end poorly, especially for Americans (and, not coincidentally, also for the Republican party).
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
