Sometimes it takes time and a wide-angle lens to put public policy into perspective. Real-time snapshots just won’t do the trick. After some reflection, I find the larger picture may be starting to emerge with respect to trade policy.
In a recent radio interview, the talk show host I was speaking with focused on U.S. trade policy and what might be expected from the ongoing tariff wars with China. I made the point that the Trump administration’s affection for tariffs involves more than China — that as early as April 2017, the United States had imposed tariffs on Canadian timber products, followed shortly thereafter by tariffs on Korean-produced home appliances, and then globally on broad categories of aluminum and steel.
I noted the recent on-again, off-again brush with tariffs on all imports from Mexico and recalled that very early in the Trump years, serious attention had been devoted to implementing a border tax on Mexican imports as a way to fund construction of a wall along the U.S. southern border. I also mentioned that Trump had ordered a Department of Commerce investigation of automobile imports and the extent to which the strong U.S. market presence of foreign-produced vehicles might have a negative effect on our ability to defend ourselves in the event of war.
In short, the Trump administration’s extensive trade actions cannot be explained solely as an effort to induce China and other countries to open their doors more widely to American goods. Nor are they simply about avoiding foreign trade practices that disadvantage U.S. producers.
Now, as I reconsider that conversation, I come to a broader conclusion: Trump administration tariff policies seem simply to reflect a fundamental dislike of our being engaged in world trade. Differing justifications are offered for different tariffs.
Near the end of the radio interview, I was asked an excellent but tough question: How should the so-called “average American,” who hears constant chatter about tariffs and trade wars and is looking for a way to determine what really hurts us or helps us, focus on?
Before getting to what might be called practical considerations, I suggested that all Americans should question the role of their government in limiting their ability to write contracts with sellers of legitimate goods and services, irrespective of the address or location of the seller.
We Americans, operating in an ostensibly open, free-market economy, look to government to protect our property rights, to help adjudicate disputed contracts, and to provide security for our families, homes, and shipping lanes. We should view with skepticism any government action that limits our freedom to engage voluntarily in trade with other people. Under our system of government, any limitation on trade is a limitation on our own pursuit of happiness.
After taking a deep breath, which the host probably appreciated, I turned to the practical part of the question: First, look closely at what happens to the cost of housing, the prices of automobiles and appliances, at employment growth with exporting employers, and at the prices we pay for small-ticket items, which more often than not come to us from China.
Plenty of consumers may do that, see slightly higher prices, and find little to be all that alarmed about. That doesn’t mean that limitations on free trade impose a trivial cost on ordinary people. Price increases of a few nickels and dimes on a host of consumer goods for a few hundred million consumers can generate a huge total loss, but one that is still almost hidden to the eyes of one consumer or even one family. Moreover, a family of limited means may pay hundreds or thousands more for everyday items over the course of a year without realizing where it went.
Now assume for the sake of argument that a search for the costs of tariffs on goods that U.S. consumers buy from Canada, China, Germany, Mexico, or elsewhere turned up nothing. Even if this is the case, there is yet another cost, and any people denied the ability to buy the item they preferred have borne it.
The American dream is about legalizing freedom. We should be sensitive to any loss of freedom at the hands of government and wary of its justification.
Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business & Behavioral Science. He developed the “Bootleggers and Baptists” political model.
