It has become fashionable in some Republican circles to champion tariffs, and now the “External Revenue Service,” as part of an “America first” agenda. Supposedly, tariffs will improve the U.S. economy and strengthen the U.S. position on the global stage. Many people also think tariffs can be a good negotiating tool, most recently with Canada and Mexico, and perhaps the Netherlands. But this view of tariffs is wrong.
Tariffs will reduce U.S. influence around the world. High tariffs on Mexico mean Mexican companies will have to pay more to do business with the United States. But they can also increase trade with other countries, especially aggressive ones such as China that are eager to do more business with them. We would be fools not to expect the Mexicans to increase their trade with China if we penalize them for trading with the U.S. Mexico-China trade reached $100 billion last year, almost triple what it was only 10 years ago.
