Here’s a follow-up note to a correspondent who describes himself as a “recovering free trader.”
Mr. H__:
Thanks for your reply to my last note.
You write: “When other countries reduce their imports from us it injures our economy and President Trump is fully justified in trying to stop them from injuring us like this.”
I disagree. First, even if your argument were correct, it doesn’t describe the actual pattern of Trump’s willy-nilly tariffs.
Second and more fundamentally, your argument is fraught with pitfalls. It’s true that some U.S. producers lose sales because of other countries’ tariffs, and these lost sales can shrink the scale of these producers’ operations, causing their per-unit costs of production to be higher than these costs would be absent the foreign tariffs. But what reason have you to suppose that the benefits that we’d reap tomorrow if our tariffs eventually pressure foreigners to lower their tariffs would be greater than the costs we incur today to exert this pressure? Do you trust politicians to have such knowledge?
Further, as Adam Smith warned, it’s unlikely that there is much overlap of those of us who would pay the bulk of the costs of our government’s retaliation with those of us who would reap the benefits of this retaliation. What ethical principle justifies the U.S. government picking your pocket with tariffs, however temporary, in order to swell my pocket with increased export sales?
Finally, what’s the limiting principle of this too-convenient justification for protective tariffs? Foreign tariffs are not the only source of reduced U.S. exports. Another source, for example, is the fact that foreigners in many countries don’t work on weekends and holidays. Should our government, therefore, impose tariffs on such countries until and unless their governments mandate that all adults in those countries work 365 days each year? Such a mandate, after all, might very well increase our exports.
Foreigners aren’t ethically or economically obliged to buy our stuff. It follows that we are not ethically or economically justified in attempting to force them to buy our stuff – especially when such attempts involve using force to prevent our fellow citizens from spending their incomes in whatever peaceful ways they think best.
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
