With Donald Trump coming back into Presidential power, complete with trumpeting new promises of 25% tariffs to foster an ‘America First’ trade policy, here’s a throwback comment from LPQC/QL Chair John Clifton’s blog (from 2018) on the issue. While it may make short term political sense (such as to move other countries into conformity with US policy on defending the borders et al), Clifton doubts it makes any economic sense for America in the long term:
“…the Donald also announced he would implement a tariff strategy to bring various countries ‘who have not treated us fairly’ or economically wrecked us to heel for their transgressions, as fulfillment of his long-desired intent to pursue a policy of economic nationalism. While his heart is in the right (anti-globalist) place, this course of action to deal with the culprits presumes 1) it’s the fault of those countries for our economic difficulties, 2) that tariffs will work as a corrective action, and 3) that it is the only way to pursue an ‘
America first’ trade policy. The rest of us are scratching our heads wondering, but, um, what if none of these particulars are true, and, what about our bloated big government, the 21 trillion in debt (note, now 36 trillion) this nation has run up, the monetary distortions brought by Federal Reserve and Wall St cronyism upon our economic system, etc, as more likely suspects?
A tariff is a tax, and it gets passed on to us. A tariff leads to other retaliatory tariffs. In an escalating trade war, everybody loses. This is Economics 101. Just speaking up for the libertarian alternative, integrated with a nationalist perspective: G. W. Bush pushed for tariffs, did that improve the US economy or trade position? Nope. From a market 101 point of view, what happens when costs go up for any business? Don’t they just get passed on to consumers in the form of higher prices? Yep. So aren’t tariffs a prescription for more trade unfairness, rather than less? Yes. The problem is not free trade, but with state-enforced managed or open trade. As in other economic matters, the state should get out of the way, not try to micro-manage it, or set up a ‘fair’ racket that serves as yet another form of corporate welfare.
So one can be a free trade nationalist and oppose tariffs, on the basis that they are bad for the country and the economy. Just as corporate or crony capitalism is a corruption of true capitalism, corporate or managed “free trade” is not real free trade. Mercantilist big corporations misuse these terms to push government policy that create international sweetheart deals for them, while dumping the expenses onto others. The real level playing field should be for all people and companies, big or small, to have the same freedom to trade with others abroad, not for a handful of big boys to use government to force open access to foreign markets, regardless of the details. Tariffs only add to government-caused distortions of the balance, they do not cure it…
Bottom line, we don’t need an apparatus of tariffs to make America great again, or to solve trade problems that were created by corporate welfare, the banksters, and by the mass exporting of jobs away from the US. More government force, more bureaucracy is not the answer.”