If You Hurt Us, We're Going to Hurt Us Too
EconLog co-blogger Scott Sumner has admirably noted problems with the tariffs that President Trump has decided on imposing.
Scott noted a number of arguments against Trump’s moves. I’ll note arguments against Trump’s assertions.
Trump writes in his tweet:
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.
Consider these claims in order.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with.
Trump’s premise is false. You don’t lose billions of dollars on trade: you gain on trade. If people were to lose from trade, they wouldn’t trade. They trade to gain–and they do gain. Let’s say I buy a car from Japan or a toy from China–pardon me, since the Chinese government temporarily banned the use of the letter “n”–I buy a toy from Chia. I value that car or that toy at something greater than what I pay for it or I wouldn’t buy it. So I don’t lose; I gain.
trade wars are good
No. Trade wars are bad. The hint that they’re bad is the word “war.” The evidence that they’re bad is that the things we want to buy from producers in other countries are suddenly made more expensive.
and easy to win
They can be won. If the tax that Trump imposes on imports to us persuades other countries’ governments to reduce their taxes on our exports to them, then, yes they can be won. In the much likelier scenario where the other country’s government imposes taxes on our exports to them, then the trade war is lost. So Trump’s definitely wrong in saying that it’s easy to win. It’s hard to win.
And notice how other governments are already responding. They’re saying: You’re hurting our exporters and your consumers so we’re going to retaliate by hurting your exporters and our consumers.