Here’s a letter to the Wall Street Journal.
Editor:
You’re correct that the U.S. economy is now showing signs of the inevitable damage done by Mr. Trump’s tariffs (“The Trump Economy Stumbles,” August 2). Yet some of your wording carelessly grants too much to the administration’s case for protectionism.
You write that “much of the world will now pay 15%, if Mr. Trump sticks to his deals.” Not so. Because – as the evidence shows – pre-tariff import prices aren’t falling, what you mean is that Americans will now pay 15% for imports from much of the world.
It’s therefore inaccurate also to say, as you do, that failure of other countries to retaliate with tariffs of their own means that “that these countries seem willing to absorb the 15% tariff.” These countries are indeed willing to absorb the shrinkage of their U.S. markets rather than risk the further shrinkage that a trade war would cause. But because the president’s tariffs are paid by Americans, the people who are ‘absorbing’ the bulk of the tariffs aren’t foreigners but, rather, American firms and households who are paying the higher prices.
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
