Here’s a response to a different commenter at my Facebook page.
Mr. Martin:
In response to my Facebook post critical of Trump’s protectionism, you write that Trump’s policies create great harm for Canada but are a mere “inconvenience” for us Americans.
Why should we be pleased with, or even indifferent to, any hardships that our government inflicts on Canadians? Even from a selfish perspective, what do we gain from their suffering? Indeed, economics tells us that we lose from their economic suffering. (Would you prefer that your neighbors be productive and wealthy, or unproductive and poor?)
You’ll point out – as you do in your comment – that Trump’s policies have induced several companies to move their investments from Canada to the U.S. And you obviously presume that these investments are good for Americans. But you’re mistaken.
Investments made in the U.S. rather than abroad only because U.S. protectionism prompted these investments in the U.S. harms most Americans in at least two ways.
First, we Americans will pay for the outputs of these U.S.-based facilities prices that are higher than we would have paid for the same outputs had these investments remained in Canada, for Canada is where the market revealed these outputs can be produced at lowest cost.
Second, these tariff-induced investments in the U.S. aren’t free. They use land, resources, and workers in the U.S. that would otherwise be used to produce not only other outputs, but other outputs that these resources can produce at a comparative advantage. But because of Trump’s protectionism, these other investment and employment opportunities in the U.S. are squelched, and these other outputs aren’t produced in the U.S. Put differently, these tariff-induced investments pull resources and labor in the U.S. out of more-productive and into less-productive channels. The fact that a similar inefficiency of resource use is caused also in Canada does nothing to diminish the economic harm suffered by Americans.
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
