Trump’s tariffs are tariff-fying

Free trade is universally accepted by economists, but not the Trump administration.


Stephanie Chasez, via Flickr, public domain

During a bilateral press conference, Swedish Prime Minister Stefan Löfven criticized the tariffs on steel and aluminum.

On March 1, President Trump announced stiff tariffs on steel and aluminum imports. The measure has seen universal opposition from economists. In the political landscape, congressmen within Trump’s own party revolted. Over a hundred House Republicans signed a letter against the tariffs. Gary Cohn, Trump’s top economic advisor, resigned in response. World leaders denounced the measure. Trump’s continued assault on trade does not have any basis in economics, and will continue to harm the U.S. economy.

From the start of Donald Trump’s campaign, he’s been against free trade. When Trump gained office, he withdrew from the TPP and continued to dub NAFTA the “worst trade deal.” However, economists universally support free trade.

In 2012, the IGM Economic Forum—a consortium of economic experts—unanimously agreed that trade with China makes most Americans better off because they can buy goods that are made or assembled more cheaply in China.

The US does not ‘lose money’ on trade. A budget deficit is not the same thing as a trade deficit”

— Gus Beringer

Furthermore, in 2016, 86% of the IGM Economic Forum agreed that “trade toughness” hasn’t been the reason why workers in Michigan and Ohio lost jobs—a lie repeatedly parroted by the Trump administration.

On Twitter, Donald Trump defended his decision, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore–we win big. It’s easy!”

This is incorrect. The U.S. does not “lose money” on trade. A budget deficit is not the same thing as a trade deficit. Imports are the entire reason the U.S. trades, and are not a means to an end. According to economist Noah Smith, imports compliment US production by providing essential foreign made parts and tools—it doesn’t harm the U.S. budget or GDP.

Nobel Prize winning economist Milton Friedman argues that imports are the entire reason the U.S. trades, not exports. “What we export is the cost of getting those imports. And the proper objective for a nation…is to arrange things so we get as large a volume of imports as possible, for as small a volume of exports as possible…You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. It’s favorable when you can get more by sending out less.”

President Trump’s whole rhetoric on trade isn’t based in reality. Trump argues from a perspective that exports are the only reason to trade—however, imports are even more important. Running a trade deficit isn’t actually harmful for the U.S. economy.

It is important to note that there are winners and losers in trade. Although there is a net benefit to the U.S., people can still lose their jobs. The solution isn’t to stop trading altogether and adopt protectionist stances—as Donald Trump has done. It’s to help the people that are harmed by trade. Policies like Trade Adjustment Assistance should be bolstered to help retrain workers that lose their jobs.

The most visible way that the tariffs will harm the U.S. will be through rising prices. In this form, the tariffs essentially function as a tax, which has brought criticisms from Trump’s party. Senator Ben Sasse said that, “kooky 18th-century protectionism will jack up prices on American families.” A group of 107 House Republicans signed a letter denouncing the trade restrictions.

A trade war can never be won and must never be fought.”

— Gus Beringer

Throughout the world, the tariffs aren’t being ignored. The European Union outlined a list of goods that it would impose tariffs on if the Americans tariffs were imposed. China has also vowed to retaliate. China’s foreign minister, Wang Yi, said that “China would have to make a justified and necessary response.”

A trade war cannot be won and must never be fought. There are only losers in a trade war, and if Trump continues down this path, the U.S. will lose big.