Not every tariff is a boon, nor is every one a bane. But they can provide long-term gains well in excess of their short-term costs.
P resident Trump’s affection for tariffs is being roundly criticized across the ideological spectrum. That should give Americans reason to be suspicious.
Some supporters of Trump’s preference note that this demonstrates the continuing affection that elites have for globalism regardless of their nominal placement on left or right. But simply noting that is not sufficient to merit our support for Trump.
Tariffs should not be an article of faith for anyone. We should instead evaluate each proposed imposition as we would any other proposed government action, in terms of costs and benefits.
The costs are well known. Tariffs on imported goods raise their cost, and that cost is borne in the short term by the importers and their consumers. Trump is clearly wrong when he claims otherwise.
Raising the cost of any transaction will make people less likely to engage in it. Again, in the short term this will reduce the amount of money available for the range of transactions in the economy and thereby inhibit growth. This applies to both the importing and the exporting nation and their residents.
If aggregate global growth without concern for its distribution among nations and individuals is your lodestar, then you should always oppose tariffs. If any government intervention in the economy is anathema to you, then tariffs are a false god whose worship should be banned.
Two things, however, should be obvious. First, Americans elected Trump on a platform explicitly rejecting the first premise. Trump’s America will not pursue aggregate global growth without regard to how it affects America’s global or internal interests.
Trump’s election shows that Americans want American consumer dollars to help raise American wages and jobs across the educational spectrum. It does not matter to them that returns on investment, and hence corporate profits, might decline, or that the global movement up from extreme poverty will be slowed.
Government economic intervention is also not something Americans shy away from. Immigration control, for example, is an intervention in the market for domestic labor. We weigh the level and nature of that control against the supposed benefits it will bring, not (except among the most devout libertarians and globalist progressives) as an unalienable natural right.
Tariff advocates today argue that two benefits will flow from their general imposition. Tariffs should drive some manufacturing back to the United States as the cost of exporting that capability rises. That will create more well-paying jobs for Americans and enhance our domestic security by restoring our capability to produce items needed for waging war.
This might cause some additional inflation in the short term as manufacturing adjusts to the new incentives. It should not, however, be a source of continued inflation once the new price level is set for the goods resourced to the higher-priced United States.
The threat of tariffs can also cause the targeted nations to do other things that are in our national interest. Canada, for example, has long underinvested in our mutual defense, spending less than 2 percent of its GDP on its military since 1991.
That lack of investment directly threatens the United States because of Canada’s long Arctic border. Any nuclear attack from Russia will come over that border long before it reaches the continental United States. As the Arctic warms, conventional assaults also become more feasible, and Russia could also use Arctic waters to transport troops or matériel to fuel its ambitions elsewhere.
Canada has been resistant to our efforts to change this trajectory regardless of who is prime minister or president. If it takes the imposition of tariffs to finally get Canada to act as the ally it claims to be, it will benefit both nations in the long term despite the short-term cost.
The proposed tariffs on Mexico could also serve American interests. Mexico has long preferred to let us shoulder the primary burden of policing our long border. That is why millions of people crossed it during the Biden administration, when that sorry crew essentially refused to enforce the law and created an open border.
Most of those people were not Mexicans, which means Mexico allowed these millions to transit hundreds or thousands of miles in its territory and shelter safely behind its borders, and then allowed them to cross unhindered by Mexican law enforcement.
Mexico surely would like to have its economic cake and eat it too. It’s costly to effectively patrol a border. If the Mexicans can reap massive trade surpluses from the U.S. and also avoid the problems that patrolling their borders would bring, it’s understandable that they would want to do that.
But that’s a Mexico First strategy. Trump is under no obligation to continue Biden’s Mexico First agenda, nor should he. Again, if it takes the threat of tariffs to make Mexico do its part on our shared boundary, the long-term benefits easily outweigh the short-term costs.
Mexico’s penchant for left-wing populist governments also should make us question the goal of making it the preferred destination for reshored Chinese manufacturing. It has not condemned Venezuelan President Nicolás Maduro’s theft of last year’s election, for example, nor has it sanctioned Russia for its invasion of Ukraine.
Permanent tariffs on Mexican exports to the United States are probably not in our interest, but we should not pretend that Mexico is a close ally that instinctively shares our values or priorities.
Biden’s continuation of Trump’s tariffs on many Chinese exports shows that these now share bipartisan support. They reduce our economic reliance on the communist country, and increasing them should continue that process of decoupling.
That’s what Trump’s tariffs have done. Contrary to some readings, Trump has added an additional 10 percent to the already existing levies, not simply imposed a 10 percent tariff. They will surely slow global growth on the margin but will help continue to retard China’s efforts to supplant the United States as the preeminent global power.
Not every tariff is a boon, nor is every one a bane. Conservatives who view tariffs through the lens of national interest will find that they can frequently provide long-term gains well in excess of their short-term costs.