The Corner

Economy & Business

On the Wisdom of Tariffs

Though I hate to pile on, it occurred to me that criticisms of President Trump’s call for steel and aluminum tariffs have come from many different corners. Kevin Williamson observes that the new tariffs will harm industries that depend on low-cost steel and aluminum as intermediate inputs. Ramesh Ponnuru, writing in Bloomberg View, reminds us that whereas the Bush administration embraced steel protection to strengthen the political coalition for liberalizing trade overall, the same can’t be said of the Trump White House, which is divided between those who hope to preserve something like the trade-policy status quo and forthright protectionists. I agree with them both on the wisdom of the steel and aluminum tariffs, albeit for different reasons.

Unlike Kevin and Ramesh, I don’t consider myself a principled defender of free trade. Rather, I favor low tariff barriers only insofar as they serve U.S. national interests (a slippery concept, to be sure). In some cases, this leads me to disagree with free traders, e.g., I’ve argued, contra Ramesh, that the Bush White House ought to have made greater use of the “special safeguards” provision of China’s WTO accession agreement, to give import-competing industries a small amount of breathing room in the face of Chinese import surges. In a similar vein, I buy the argument that the U.S. ought to have been more aggressive in countering foreign currency intervention during the 2000s. Had we gone down that road, I believe there’d be far less appetite for tariffs today.

So why do I oppose the steel and aluminum tariffs? In part, it’s because I agree with the critique offered by Robert Atkinson of the Information Technology and Innovation Foundation, an occasional National Review contributor. I asked Robert to share this thoughts in an email, and he was kind enough to oblige:

The problems with the Trump metal tariffs are numerous, but perhaps the most important is that rather than use tariffs as a weapon to force China to roll back its damaging innovation mercantilist policies, an effort for which we will need all the help we can get from our allies, the tariffs are applied indiscriminately against friend and foe, free trader and mercantilist. This alienates potential allies in the broader China effort as well as invites tit-for-tat retaliation, which the Europeans have already said they would put in place. Moreover, ever since Bretton Woods, the United States has led the world in calling for deeper global market integration.

To be sure, after Ronald Reagan the trade establishment and presidential administrations have largely ignored the notion that saving the soul of the global trading system required an offensive approach to mercantilist enforcement, and not just urging everyone to sign more free-trade agreements, many of which our trading partners such as China, Vietnam, and others ignored. Indeed, if past administrations had not been so influenced by the Washington trade establishment and had taken strong anti-mercantilist steps, we wouldn’t find ourselves in this situation. But the response to a lack of anti-mercantilism cannot be protectionism for the sake of protectionism. Going down this path will not solve foreign mercantilism; it will only make it worse.

Yet there is another reason I object to the tariffs, which I discuss in a new column for The Atlantic. One of the ironies of tariff protection is that it tends to go hand in hand with corporate lobbying for low-skill immigration. I argue that avowed economic nationalists have a choice to make: Either embrace economic autarky, which tends to increase the appetite for low-skill immigration among employers, or openness to international trade, which tends to reduce it.

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