Here’s a letter to a new correspondent.
Mr. K__:
Thanks for your latest email. You write:
I am not an economist so pardon my ignorance, but I don’t follow your and John Lott’s disagreement.
I appreciate the opportunity to clarify my last post.
Almost all economists from Adam Smith forward have staunchly opposed tariffs. Yet – and here’s the crucial point – it’s more accurate to describe that opposition as being to protectionism. This opposition is to the widespread notion that the general populace of a country can be enriched by protecting domestic producers from foreign competition. It’s opposition to the popular belief that protecting domestic producers from competition increases domestic employment, raises domestic wages, fuels domestic economic growth, and is necessary to ensure an appropriate “balance of trade.”
The case against protectionism as a means of improving the economy is so powerful, both theoretically and empirically, that protectionism can be dismissed as a sound economic policy as a matter of principle.
But because tariffs have been, and remain, the dominant means of protection, opposition to protectionism is commonly expressed as being opposition to tariffs. This wording would present no problem if tariffs’ only function were protection. Tariffs, however, can be used for purposes other than protection, especially to raise revenue.
Because John Lott is correct to observe that all taxes distort private economic decision-making, there’s no reason in principle to dismiss the possibility that taxing imports can be part of a system of raising revenue in the least-distorting way possible. Although, as economist Brian Albrecht explains, tariffs have many shortcomings even as a revenue-raising device, the opposition to tariffs for which economists are famous is opposition to protective tariffs, not to what are called “revenue tariffs.”
It’s true that Trump and his supporters – having to do P.R. for a harmful policy that Donald Trump has been obsessed with for at least 40 years – sometimes mention revenue, national security, Brazilian internal legal issues, and other non-protectionist goals to justify the administration’s tariffs. But these non-protectionist goals are not the main purpose. Protectionism is.
I urge you to read the vast bulk of what Trump has said about trade over the decades – and the vast bulk of what he says today; consult his 2017 inaugural address; scour the case for tariffs made by Peter Navarro, Robert Lighthizer, Stephen Miran, and other of Trump’s close trade advisors; sample some of the many books, essays, and tweets by Oren Cass and other “National Conservatives” who generally support Trump’s trade policies. What you’ll discover is that they are consumed with fear that America’s economy has been “hollowed out” by free trade (it hasn’t) and that U.S. trade deficits are a calamity (they’re not). Their solution to these (imaginary) problems is protective tariffs. And it’s to this protectionist “solution” that I and other serious economists object and continue to believe, with good reason, will do damage to the American economy.
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
