Mr. Howard Lutnick
Secretary of Commerce
Washington, DC
Mr. Lutnick:
Testifying yesterday before the House Appropriations Committee, you told Rep. Madeleine Dean (D-PA) that “there is no uncertainty that if you build in America, and you produce your product in America, there will be no tariff. The concept of building in America and paying no tariffs is very, very clear.”
I don’t know which possibility is more disturbing as an explanation of your assertion that tariffs can be avoided by building in America: Either you are as shockingly ignorant of economics as your statement suggests, or you hold us Americans in such contempt that you breezily insult our intelligence by supposing that we have no more reasoning power than toddlers.
Preferring not to question your integrity, I presume that the first explanation applies: You’re shockingly ignorant of economics. You’re inexplicably unaware that any extra production that occurs in America only because of tariffs is necessarily production done in America at higher costs than that production would incur were it to be done abroad. Put differently, if tariffs are required to prompt businesses to produce a smaller portion of their outputs abroad and a greater portion in America, it follows that, because of the tariffs, firms pay higher costs to produce that extra output in America.
Your assertion that, if “you produce your product in America, there will be no tariff” is patently ridiculous.
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
