Find the error. A Wall Street Journal story (“As China Trade Talks Resume, Trump Pushes an Ambitious Agenda,” February 18, 2019) states matter-of-factly:
“As trade negotiations with China resume this week, the Trump administration is racing to strike a deal that will result in long-term reforms—and prove that tariffs are an effective battering ram to open markets around the world.”
Once you realize that tariffs hurt mostly consumers in the country whose imports they hit, the last part of the statement does not make much sense. There is no serious reason to protect “our national producers.” If trade tariffs, which amount to taking domestic consumers hostage in order to open foreign markets for domestic producers, are defensible, why not decree tariffs on other foreigners’ activities with domestic effects.
Consider the following example. Some states in the world practically forbid their citizens to emigrate or travel without official permission, rendering virtually impossible for an American citizen to bring one of them to America to marry her. (Yes, sure, we can switch gender. The same happens to an American woman who wants to marry, say, a North Korean man. The case would appear even stronger as it would be a matter of helping “our national women” marry whom they want in the world.) Following the logic of protectionism, the US government could forbid American citizens from marrying foreigners whose state imposes a similar domestic prohibition, in the hope that this would be “an effective ram to open marriage markets around the world.” It would amount to taking all Americans hostages in order to help some of them by protecting the rights of foreigners.
Tariffs are a sort of partial ban. A very high tariff (called “prohibitive tariff” in trade theory) amounts to a total ban. A more “liberal” US government would not forbid Americans to marry foreigners. Instead, it could impose a tax of $10,000 to Americans who want to do it. A $1,000,000 tax would amount to a foreign marriage ban for nearly all Americans. A 100-billion-dollar tax would be more egalitarian and hit all Americans.
Doesn’t the idea of a retaliatory tariff against foreign marriages provide a reductio ad absurdum of any retaliatory trade tariff?
Instead of a retaliatory marriage tariff, it may be argued that the state has a duty to rescue any foreign woman who consensually wants to marry one of its citizens but is prevented to do so by her own government (just as the state would be deemed to have a duty to rescue any foreigner barred by his government to trade). The rescuing state would be defending individual liberty internationally. The problem is that this solution is a recipe for continuous war. Such institutionalized imperialism, especially (but not only) if pursued by foreign tyrants, would make it very difficult for a liberal state to maintain individual liberty within its own borders. War is the health of the state. Hence the liberal argument for the Westphalian state, protected against foreign intervention.
READER COMMENTS
Thaomas
Feb 21 2019 at 8:26am
Once you realize that tariffs hurt mostly consumers in the country whose imports they hit, the last part of the statement does not make much sense.
Tariffs do hurt consumers in the tariff imposing country (A), but they also hurt exporters in A (Lerner Theorem). And if A is not “small,” foreign (B) exporters are also harmed just as A’s exporters are harmed by B’s tariffs and import restrictions. So a tariff by A made conditional on the removal of a Tariff by B can make sense even though A’s consumers and exporters are harmed by the conditional tariff.
Of course if THAT were the objective of A, there would be no talk of bilateral trade balances and A would seek to become “larger” by negotiating as part of a larger group of countries like the TPP.
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