Should We Tariff Used Cars and Other Goods that We Import from the Past?

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In my latest column for AIER I point out that if protectionists are correct that the domestic economy is harmed by the availability of low-priced goods from abroad, then it must be the case that the domestic economic is harmed also by low-priced goods from the past. Two slices:

Are President Trump’s tariffs proving that two and a half centuries of economic analysis exaggerated the virtues of free trade? Have economists been wrong all these years to insist that consumers should be free to buy imports even when the prices of imports are quite low and their purchase takes business away from particular American firms and workers?

Most economists, including myself, believe not. But if we’re mistaken, our professional duty demands that we point out that Trump’s protectionism is insufficiently ambitious; it should go much further. Trump’s protectionism overlooks a source of low-priced goods that poses a far worse threat than do foreign producers to American producers and workers. That source of low-priced goods is the past.

Goods sold in resale markets cost nothing to manufacture today. If, as Trump and other protectionists argue, it is necessary to tariff goods imported from abroad to protect US manufacturers from low-cost foreign competitors, then it is equally necessary to tariff goods imported from the past. The past exports to us at much lower costs than even the cheapest foreign producers.

Someone in Boston who buys a used Buick from his neighbor withholds demand from US-based automobile producers no less than does someone in Houston who buys a new Hyundai from Korea. Were it true that taxing Americans’ purchases of imported cars is a just means of stimulating US automobile production, it must also be true that taxing Americans’ purchases of used cars is an equally just means of achieving this same goal.

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And what is recycling if not a concerted effort to import glass, plastics, paper, and metals from the past so that they can compete in the present against new outputs? Even used motor oil is recycled into lubricants that compete with newly produced varieties. Although recycling isn’t costless, it nevertheless supplies the market today with outputs that depress new production.

If protectionist logic is correct, the past is guilty of unfair competition that harms workers in factories making automobiles, batteries, lightbulbs, and other goods that are increasingly imported from the past.
President Trump and his advisors, along with protectionist pundits such as Oren Cass, assure us that one key to making the American economy great is protecting American workers from low-priced imports.

We economists are convinced that they’re deeply mistaken. But if we are wrong and they are right, they have so far failed to protect American workers from a source of imports much larger and more formidable than foreign countries: the past and the many goods that it routinely exports to us at low prices.