Here’s a letter to the Wall Street Journal.
Editor:
Ben Cohen reports that CEO Ryan Petersen, whose specialty is logistics, warns that Trump’s tariffs will inflict enormous damage on America’s small businesses (“The CEO Who Says an Asteroid Is Coming to Destroy America’s Businesses,” May 3).
Mr. Petersen – an honest-to-goodness businessman with on-the-ground experience and expertise, and skin in the game – is correct. And his warnings reveal that it’s not only us elitist, heads-up-our-butts, “neoliberal” academics who tell of the dangers of Trump’s tariffs.
To be clear, entrepreneurs, driven by the profit motive, are remarkably creative at figuring out work-arounds to obstacles. Most small businesses in the U.S. aren’t actually doomed by Trump’s tariffs. But work-arounds are costly. Some businesses won’t be able to absorb these extra costs and will disappear. Businesses that do absorb these costs will operate less efficiently than otherwise; they’ll produce less output, or output of lower quality, and sell these outputs at higher prices; their employees will earn real wages lower than these wages would be absent the tariffs; and these businesses will pay less in taxes because their net profits will shrink. American economic growth will slow, with this dampening effect compounding over time to the detriment of us all.
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
