Former President and Republican Party Presidential candidate Donald Trump is painting with too broad a brush with his blanket tariffs. Kentucky’s Republican Senator Rand Paul is painting with too broad a brush in his criticism of Trump’s tariff proposals.
Tariffs operate solely in the international trade arena, for all that they have domestic effects. Part of what’s not recognized by either man, although less so by Paul than by Trump, is that international trade has very little to do with economics and very much to do with foreign policy.
Paul is correct that protectionist tariffs are net detrimental to domestic economies. (I claim that protecting nascent industries with tariffs is beneficial, but only if they’re withdrawn when the nascent industries are better developed. The difficulty of withdrawing protectionist tariffs when they’re no longer needed, though, more than overwhelms that temporary benefit.) Trump is mistaken to push the blanket protectionist tariffs on all imports, including imports from friends and allies.
Paul’s China People’s Republic of China tariff example, though, illustrates his broad brush error.
Consider a [PRC]-made widget priced at 50 cents competing with an American-made version at $1. By slapping a tariff on the Chinese widget, raising its price to $2, American manufacturers have the freedom to raise theirs as high as $1.99. The consumer is left with no real choice but to pay more.
Reasonable men can debate the size of that tariff, but such a debate misses the essential fact that the PRC is an enemy nation bent on supplanting us in the world and dominating our foreign and domestic policy decisions. We have no business feeding the enemy nation’s economy. That alone argues for the high tariff and not settling for a countervailing one of merely 50 cents to make the imported price the same as the domestic one.
There’s more to this, though.
Consider [PRC]-made electronics. When tariffs are imposed on products like smartphones and laptops, as Donald Trump is proposing to do, American consumers end up paying higher prices. … [The PRC] accounts for more than 90% of US laptop and tablet imports.
Especially in the electronics industry—an industry that reaches far beyond consumer computers and cell phones into all types of communications devices, chip manufacturing, main frame assembly, data centers, artificial intelligence, and on and on—the national security risk of trading at all with the PRC is far too high to be mitigated with jawboning and pretty pleases alone. That risk, after all, runs to cyber espionage and insertion of sleeperware into our several network nodes, intellectual property and data theft, and including spyware and other malware on imported devices’ chips at the very least.
Tariffs set high enough to discourage imports from an enemy nation like the PRC are an entirely valid foreign policy move. That the tariffs might raise domestic prices is a cost of our national security, of our maintaining our independence of action.
