Here’s a letter to the New York Post.
Editor:
You report that Pres. Trump is promising that his administration “will be sending letters out, essentially telling people –- we’ll be very fair –- but we’ll be telling people what they’ll be paying to do business in the United States” (“Trump says US will send out letters setting new tariff rates for hundreds of countries: ‘They’ll be paying to do business’,” May 16).
The president is deeply confused. Because each and every import sold in the U.S. is purchased voluntarily by Americans, every foreign seller already pays – fully and fairly – to do business in the United States. This payment is in the form of giving American buyers good value for their dollars – value sufficiently high to persuade Americans to purchase those imports.
By artificially raising the costs to foreigners of doing business in America, protective tariffs reduce foreigners’ willingness to sell to Americans and, thus, deny to American buyers many valuable opportunities to get the highest value for their dollars.
Anyone who swallows this latest justification that Pres. Trump offers for his tariffs should ask himself or herself this question: ‘Would my neighbors and I be made better off or worse off if the administration stationed at the entrance to every supermarket armed guards ordered to collect from supermarkets payments for the privilege of offering to sell groceries to my neighbors and me?’
Not much reflection is needed to understand that supermarkets would be less eager to do business with you and your neighbors, and that what business supermarkets continue to do would be done on terms that result in you and your neighbors paying higher prices and getting less in exchange. In short, the tariffs that Trump fancies to be fees paid by foreigners for the privilege of doing business here wind up in practice being fines paid by ordinary Americans for the mistake of supporting protectionist policies.
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
