So Tariff-ying

Mammas don't let your babies grow up to be cobblers

There will be lots of spilled ink over President-elect Trump’s policy proposals, from immigration to tax cuts. I will wade into those from time to time, but one policy that Trump has long advocated for just grinds my gears and warrants my first foray into his stances on issues.

On My Soapbox. I’m talking today about tariffs. Simply put, tariffs are taxes on imports from other countries. This one is intriguing politically, as historically Democrats have loved to put the government thumb on the economic scale to advance their end goals. Republicans, on the other hand, have usually preferred less government intervention into markets. But today’s Republican Party looks little like that of eras gone by, and the tariff talk is a prime example of this shift.

Proponents of tariffs claim that they will level the playing field with competing countries by encouraging more production of goods here at home. Proponents of tariffs are wrong.

Mountains of evidence—and economic common sense—reject this notion. There are a myriad of reasons why tariffs make bad public policy. To keep my rant short, I’ll only delve into a few here.

Taxing Prosperity. A country can’t tax itself into prosperity. The more you tax citizens, the less well-off they are. Republicans generally understand this principle and have historically been the party of lower taxes. Yet, for some reason, they have convinced themselves that tariffs are a tax on foreign countries and their citizens. But study upon study shows that tariff taxes are ultimately borne by those in the importing country.

Even if you conceded that tariffs will harm the country you impose them upon more than U.S. citizens, that argument is moot once that other country inevitably retaliates with their own tariffs. And a trade war tit-for-tat will only erode any perceived advantage the U.S. has for imposing the tariffs in the first place. And then we’ll all be worse off.

From Coders to Cobblers. Another argument tariff advocates advance is that, instead of driving up the cost of imported goods, we will all just shift to purchasing American-made products. There is certainly nothing wrong with a good American-made [insert your favorite item here]. But this is a weak argument for a couple of reasons.

First, it’s a sheer fact that other countries, for a variety of reasons, can produce certain products and ship them to us for cheaper than we could produce them ourselves. Even if we begin making and purchasing products domestically, it will almost always cost us more to do so. In this scenario, now we are paying more for the products that we import with higher taxes as well as the products we make here at home.

Another reason this argument fails is the natural evolution of an economy. Some countries are currently having their Industrial Revolution. I’m glad we had ours centuries ago and have moved on. We are now a service economy. Ask yourself this: would you prefer your child learn to code or how to make Nike shoes? I’ll go with the coder over the cobbler any day.

In a developed economy, we can create wealth for our citizens by offering services sold out of offices (and now more than ever, our homes) while purchasing goods made in plants from other countries. As a result, we get richer, work fewer hours, and have less dangerous jobs. I suggest we keep it that way. Let’s say no to tariffs and find better ways to compete on the world economic stage.