Here’s a letter to a new correspondent.
Mr. S__:
You ask how I can “be so certain President Trump’s tariffs won’t spark an American economic renaissance. His 10% tariffs seem a good tool for that.”
Let’s assume, contrary to what I believe is fact, that you’re correct that the American economy is in dire need of a renaissance. What logic leads you to conclude that restricting Americans’ access to goods and services will result in Americans’ gaining greater access to goods and services?
Consider this: The value of U.S. imports today is about 14 percent of U.S. GDP. Suppose the government, rather than imposing a ten percent punitive tax on Americans’ purchases of imports, instead sent agents to all American households, businesses, farms, hospitals, schools, and churches with orders to destroy, every year, 1.4 percent of the properties in those establishments. Do you think that such a policy of intentional destruction would spark an American economic renaissance?
My guess is that you understand that such a policy would simply be destructive. You might even realize that it would result in the annual destruction of more than 1.4 percent of Americans’ property values as we would, in response to this organized vandalism, divert some our time and effort away from producing valuable goods and services and toward trying to hide as much as possible of our property from the uniformed hooligans.
Can you tell me how a government policy of effectively destroying at the border a significant chunk of what Americans are paying for differs from a government policy of destroying in our homes and workplaces a significant chunk of what Americans have already paid for?
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
