Here’s a letter of mine that is just published by the Washington Post:
George E. Bogden’s justifications for President Donald Trump’s tariffs in his Jan. 29 online op-ed, “Forget TACO. It’s GUAC that matters with Trump’s tariffs,” were far from being the nutritious feast that he supposes.
Bogden wrote that “tariff opponents judge the policy on whether it conforms to an economist’s ideal of friction-free markets.” We opponents point out that tariffs that enable some domestic industries to expand necessarily draw resources away from other domestic industries, causing these other domestic industries to shrink. This effect is as inescapable in real-world markets, with all of their frictions, as in “friction-free” textbook markets.
We also explain that tariffs used as bargaining chips, which are the focus of Bogden’s praise, are inconsistent with the president’s wish to increase American manufacturing or to raise revenue. Because bargaining chips are withdrawn when opponents capitulate, such tariffs won’t protect manufacturing long enough to spark increased investment. Nor are such chips a useful or reliable source of revenue.
It’s as unsurprising as it is undeniable that, as Bogden documents, Trump’s tariff threats often pressure foreign governments to alter their policies in ways that at least appear to suit Trump’s fancies. It’s equally undeniable that Trump’s tariff sturm und drang creates economic inefficiencies and policy and market uncertainties in the U.S., as well as ill will among the allies that America will be sorry to have antagonized if and when tensions with China further intensify.
Donald J. Boudreaux, Fairfax
The writer is the Martha and Nelson Getchell chair for the study of free market capitalism at the Mercatus Center at George Mason University.
