Here’s a letter to a new correspondent.
Mr. P__:
Thanks for your email.
You ask if my “antagonism to President Trump’s tariffs is softening in the light of his winning for us better trade deals.”
No. Not only has he, in carrying out his trade policy, further eroded the rule of law by abusing powers delegated to him by Congress, U.S. tariff rates today are multiple times higher than they were in January. According to the Yale Budget Lab, Trump’s belligerent trade policy raised “the overall US average effective tariff rate to 18.6%, the highest since 1933.” This rate is nearly eight times higher than it was when Trump was sworn in to his second term.
Because U.S. tariffs are overwhelmingly taxes on Americans – and because I oppose high taxes (especially ones that are as discriminatory as his tariffs) – I count this massive tax increase as a major loss. The fact that this tax rate hasn’t (yet) risen as high as Trump initially threatened to raise it is hardly reason to cheer it as a win when this rate is compared to the far lower rate of taxation that prevailed before he took office.
Put another way: Trump thinks that we Americans win whenever our exports increase by more than our imports. He believes that the measure of America’s trade success is the size of our net sales. But he’s got matters backwards. In reality, Americans win (if we must analyze trade to sports) whenever our imports increase by more than our exports. The true measure of America’s trade success is the size of our net receipts of goods and services that contribute to our standard of living.
Although he’s unaware of the logic of what he’s doing, the fact is that Trump is putting Americans last by arranging for us to work and sweat to supply foreigners with as many goods and services as possible and to have foreigners do as little as possible in return for us. Were Trump’s trade policy carried to its logical conclusion, he would – as he demands adulation for allegedly winning for us the ultimate victory – in truth have turned us Americans into the rest of the world’s slaves.
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
