The Editorial Board of the Wall Street Journal decries Trump’s destructive steel and aluminum tariffs. Two slices:
The best that can be said about President Trump’s blessing of Nippon Steel’s purchase of U.S. Steel is that it blocks Cleveland-Cliffs’ political power play to buy U.S. Steel instead. The worst to be said is that the purchase has become another opening to make U.S. companies less competitive with higher tariff walls on foreign steel.
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His first-term steel and aluminum tariffs caused prices to rise for a period, but higher prices hurt customers and caused demand to fall. A Federal Reserve Board of Governors study estimated the tariffs cost 75,000 manufacturing jobs. Employment in fabricated metals manufacturing is still some 33,000 lower than when the tariffs took effect.
GMU Econ alums Scott Burns and Caleb Fuller continue their series on teaching economics during the trade war. Two slices:
To be fair, trade wars aren’t some new obsession for the president. He’s had his eye on this particular doomsday device for quite some time. Protectionism has been the most consistent (and perhaps only) through line in his political thought dating back to the 1980s. Although many believe the president was reined in from detonating a full-blown trade war in his first term by a largely pro-trade cabinet, he didn’t exactly hide the nuclear football with his desire to launch one. In 2018, the “Tariff Man” telegraphed his “Liberation Day” policies by tweeting: “trade wars are good, and easy to win.”
This time around, however, the president isn’t alone in his affinity for tariffs. The Trump 2.0 cabinet is littered with Tariff Men. As we argued in an earlier article, although their motives vary, they’re all united by antagonism towards trade and a belief they can effectively reengineer the global economy.
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This story of how nations become wealthy lies at the heart of Adam Smith’s Wealth of Nations. Smith recognized that specialization and trade are engines of economic development. As he observed, “the division of labor is limited by the extent of the market”—the more trading partners we have access to, the more we can specialize, and the wealthier we can become through trade. It’s no coincidence that the wealthiest nations today are the ones that place the fewest restrictions on trade. No nation has achieved great prosperity by restricting trade, but many have stagnated or declined by doing so.
After decades of shouting into the void that free trade is good, those of us in the “eliminate tariffs, embrace comparative advantage, and let me buy my haggis-flavored chips online without an import tax” crowd are experiencing something that hasn’t happened in a while: new friends. Things have been especially lonely in recent years, as the right veered away from offering even lip service to free trade while the left coasted on the fumes of its union-driven protectionist past.
But a recent poll from the Polarization Research Lab shows those same lefties making a sudden and striking turn. At the start of 2024, liberals and conservatives were nearly identical in their lukewarm support for unrestricted trade—about 20 percent each in favor. Following President Donald Trump’s electoral win and renewed protectionist rhetoric, liberal support has more than doubled to over 40 percent.…..
Tariffs are just taxes in sheep’s clothing—dressed up as patriotism, but fundamentally designed to pick your pocket. They don’t protect American workers; they protect politically favored industries from having to innovate, improve, or compete. Every time you pay more for a washing machine or a beer because of a tariff, you’re experiencing crony capitalism with a red, white, and blue bow on top.
I wrote a piece last week critical of Vice President JD Vance’s understanding of markets. I offered my view that the laws of supply and demand govern markets the way the laws of gravity govern the physical world—they are invisible, predictable, powerful and true. I never said economics and physics are the same. Or that the social and physical sciences use identical processes of discovery. Yet somehow the discussion descended into a debate over a familiar question: Is economics a science?
The question isn’t helpful. Embedded within it is a faulty assumption—that observations about the world emerging from the hard sciences are somehow superior to or more useful than observations emerging from other academic disciplines. Simply, if economics is science, then it’s real and we’re bound by it. If it isn’t science, anything goes. We’re free to build a brave new world.
This perspective suits the dirigiste pied pipers advising Mr. Vance and informing the policy decisions of the Trump administration. Everything about them suggests a desire to ignore economic history. They want to prove that they can’t be dictated to by the market. Tarring economics as “not a science” gives them political room to run. The protectionist utopia is just around the corner.
Trump’s lashing-out at the Federalist Society is indeed a bad omen.
James Pethokoukis applauds “another step forward in removing NEPA as a barrier to building.”
Erec Smith details the cheap, false tricks of many DEI enthusiasts. (HT George Leef)
