Economists – who have predicted seven of the last four recessions – will tell you that trade tariffs are bad. The reason tariffs are bad is that they make imported goods more expensive. The money for the tariff has to come from somewhere, so it gets built into the price of the product.
So, the effect of an American tariff on, say, televisions made in China is to raise the prices to the American consumer.
OK, I buy that. But what does that mean in real life?
It means that a family in Peoria that would like to buy a 60” TV might have to settle for a 52” screen.
That strikes me a something less than catastrophic. If that’s a “global trade war” then these economists never studied the lead-up to World War Two.
But still, I admit that settling for a 52” TV rather than a 60” TV is not a positive. It’s a negative. Especially if you combine it with settling for a phone with a camera having 2X zoom rather than 3x zoom, and settling for a car that goes 0-60 in 5.9 seconds rather than 5.6 (both of which are way faster than the muscle cars of yesteryear, by the way), and settling for a dishwasher that you can turn on and off easily but not from France.
So, I do acknowledge that tariffs entail some cost to people who like to buy stuff – and we all do like to buy stuff. But that’s not the whole story. Credit Donald Trump and J.D. Vance for starting a discussion on this.
There are several legitimate reasons for tariffs. One is to protect a strategic American interest. Steel is used throughout industry, from buildings to tanks. Sure, we could import all our steel from China, for now, but what happens when we close our steel mills and then have a conflict with China and they cut off our supply?
A second reason for tariffs is to use them as a bargaining chip. Foreign countries sometimes unfairly protect their industries from American goods, whether it’s the vineyards in France or the chip-makers in Taiwan. We can unilaterally remove our own trade barriers while they retain theirs, but a smarter approach is to threaten a tit-for-tat where we impose barriers unless they remove theirs. This typically works.
Everyone admits both of these reasons. Weighing and applying them can be complicated, but there’s no doubt about their legitimacy.
A third reason for tariffs is more subtle. It’s to protect American culture – and French and Italian and Korean culture.
Economists will tell you that the best economy is the one that’s the most efficient. That sounds logical. It means that if wine can be produced most efficiently in Italy, then that’s where is should be produced. If steel can be produced most efficiently in China, then that’s where it should be produced. If AI software can be produced most efficiently in America, then that’s where it should be produced.
The reason that efficiency trumps everything else, the economists will say, is that the efficient production of goods leads to the lowest prices for those goods. Low prices mean greater availability to poor people. What could be more important than globalized trade that results in cheap goods for poor people?
Culture, that’s what. And the best culture is not necessarily the most efficient one.
Maybe good wine can indeed be produced more efficiently in Italy than in France (my own judgment notwithstanding). Does that mean the French vineyards should be put out of business?
Maybe cars can be produced more efficiently in Korea than in Italy (which is surely the case). Does that mean the car factories in Italy should be demolished so that they can be made into vineyards and we should all drive a KIA and not a Ferrari?
An economist would answer “yes.”
But an economist knows the cost of everything and the value of nothing. Destroying those French vineyards exacts a cultural toll on the French countryside and its people that is impossible to assign a Euro value to. Destroying those Italian car factories that build automotive works of art is almost like destroying Florence.
And what about the personal toll on the workers and their families?
What’s that you say? They should “learn programming?” But AI is putting programmers out of business too.
Economic efficiency is not the highest and best goal of a trade policy, especially in a rich culture. The loadstar of our trade policy – and our foreign policy – should be something more than that.
the Aspen beat 
So there’s David Ricardo’s law of Comparative Advantage, the altar at which these economists have been worshipping since 1817: British wool and French wine succeed in international trade. French wool, not so much–and Britain prudently stays out of the wine export trade. But that’s mainly a result of climate and terrain, which stay put.
Manufacturing capital can and does move, and at times very quickly. And that’s not just the machinery: intellectual capital transports fast and smoothly.
And here’s the punch line: some of that intellectual capital is in the heads of the people on the factory floor. It takes a long time to develop, that know-how, those lesson of experience, and it withers the moment the jobs get shipped offshore. And it can’t be recreated in a vacuum, so we end up with a generation that figuratively does not know which end of the wrench to grab.
Jacob
My biggest concern is Communist China, although I would add in the narco-state Mexico, and other rogue nations like Iran, etc. America should absolutely tariff the dog crap out of China. Bill Clinton’s 1990s era screw-up (or perhaps it was deliberate?) of giving China favored trading status and then allowing it into the WTO is a blunder for the ages.
By the way … I was shocked to read that there is an annual torture-fest and killing of dogs in China, as the pain inflicted upon man’s best friends is rumored to make the meat tastier to exacting Chinese diners. File this along with China’s penchant for shark fin soup, Wuhan bat soup, and the horns of endangered rhinoceros as an aphrodisiac.
But back on track now … in the 1990s Slick Willie was getting all sorts of Chinese kickbacks way back then. Remember the Johnny Chung, Charlie Trie, and John Hwang scandals? What about Clinton giving the ChiComs the Loral satellite and missile technology?
I can still vividly remember watching the Tiananman student protests in 1989 shortly after getting my active duty discharge from the Navy. I’ll never forget that brave young student who stood up to the tanks. Then the despicable ChiComs proceeded with their massacre of the student protesters, and all Poppy Bush (POTUS 41)) could do is stay silent because … what?!? He once served as ambassador to China and still had friends in high places over there?
I remember my disappointment with Poppy Bush, and his globaloney talk of a “new world order” compelled me to vote for Ross Perot in 1992 … something to this day I do not regret. At least Perot campaigned on protecting America’s sovereignty, keeping American jobs here in America and not outsourcing them to corrupt Mexico, and balancing the federal budget and eliminating the then ($3 trillion?) national debt. The 1990’s $3 trlllion debt vs. today’s $33 trillion debt … life seemed so much more sublime back then.
Looking back, Ross Perot seems like a predictor of the Donald Trump MAGA movement to come some 25 years later.
I’ve said this before … China, under the jackboot of the CCP, is unworthy to have any favorable trade status with the U.S. There was once some political spin back in the 1990s that opening free trade with China would liberalize the country and make it more tolerant and democratic. This free trade with China has only enriched the dictators while fueling their military expansion and police state.
In the meantime, if anything there has been a reverse effect as America seems to resemble China more and more; more surveillance, more speech codes, more intolerance for opposing views, more hatred of our capitalist system, etc.
While the open trade has benefitted the CCP and has moved the government away from Maoism, it has become a de-facto fascist country in which its totalitarian government has embraced a corporatist type of mercantilism in which billion dollar Chinese corporations do the bidding of the CCP and the People’s Liberation Army, all synchronized and in goose-stepping lockstep reminiscent of Il Duce.
The CCP controls the media, academia, virtually all facets of civil life, even to the point where all comrade citizens are given social credit scores based on their loyalty to the Party. All of this is downright Orwellian and a stain on humanity.
I want America to engage in free trade with as many countries as possible. But the countries we freely trade with must be countries that share many of our same American values that emphasize human rights and dignity, representative constitutional democracy, and rule of law.
Sadly … America has lost most of its moral high ground as our nation more and more resembles a banana republic. Biden and his ilk have openly promoted hate speech against their political opposition (slandering MAGA as quasi-fascist) while also utilizing third world lawfare tactics to go after DJT and his supporters.
Now the Democrat Party operates as an undemocratic cabal, disregarding tens of millions of primary voters who voted for Biden, only to have a behind-the-scenes political coup and coronation at the upcoming Chicago DNC. The Democrat Party is the least democratic institution in America.
There still seems to be some free-trade conservatives and business-minded libertarians who still seem to have a fetish for the Chinese Communists. Where do these “fre-traders” stand on the ChiComs violating their agreed treaty with the British and subjugating Hong Kong to their totalitarian jackboot some 25 years early? Hong Kong was once the epitome and global symbol of free-trade capitalism. If the ChiComs are so willing to violate their agreement with the British, why the hell should America ever trust them to keep their word for anything?
Many of these “free-traders” make that Bolshevik adage (perhaps it was Lenin, or one of his minions) that goes “capitalists will sell us the rope that we will use to hang them” seem very prescient.
Meanwhile, China’s belligerence towards Taiwan demands more than just political bromides and platitudes. America should be doing a 21st century version of the Berlin Airlift to keep these communists (in name only now, because they are actually fascist) in check.
Let’s pull a Reagan Cold War move and let’s work with Taiwan to put U.S. based nuclear cruise missiles on the island, kinda like what Ronaldus Magnus did in Western Europe in the 80s. WTH … while we’re at it let’s work with the Japanese to do the same thing too, so we can box in China as well as scare the crap out of that porky little NorK rocket boy on the upper half of the Korean Peninsula. But all of this takes real leadership, strong political will, and a political spine coupled with nerves of steel. These qualities are non-existent on the left and in the DNC universe.
Any nation that bears America ill will does not deserve the honor of free and open trade with America, and I am including Mexico in this category of bad actors too. Let’s have more free trade with our trusted Allies, with Israel, with Taiwan, with The Philippines, and with countries that are making great strides in political and economic reform bending towards more freedom, like Argentina.
Let the totalitarians wallow and stew in the fetid political sewage that their Big Brother policies create; let’s curse the totalitarians to hell.
Our landfills are full of cheap crap made over seas. Give me a made in America 1960’s Maytag Washer and Dryer.