Tariffs: A Blunt Tool or a Sharp Tool?

Member Group : Let Freedom Ring, USA

Tariffs are a fascinating subject for anyone interested in genuine political science and economics. Donald Trump has brought them back onto the main stage for the first time since Pat Buchanan’s now-forgotten Presidential campaigns in the late 20th Century. Back then, conservative dogma haughtily dismissed Buchanan’s proposed tariffs as “protectionism” and continued to tout free trade as economic gospel. In a radio address in 1988, Ronald Reagan said “Over the past 200 years, not only has the argument against tariffs and trade barriers won nearly universal agreement among economists but it has also proven itself in the real world, where we have seen free-trading nations prosper while protectionist countries fall behind.

America’s most recent experiment with protectionism was a disaster for the working men and women of this country. When Congress passed the Smoot-Hawley tariff in 1930, we were told that it would protect America from foreign competition and save jobs in this country—the same line we hear today. The actual result was the Great Depression, the worst economic catastrophe in our history.”

While it is true that free trade leads to lower prices, there is a flaw in the argument that it also leads to more prosperity. Our national interest lies in more than just consumption of goods and services. It also lies in our ability to produce goods and services.

Our ability to “out-produce” our enemies in World War II was a major factor in the Allied victory. Could the Allies have won if they had to buy aircraft, ships and vehicles from Germany and Japan? And after the war, as the world’s largest manufacturer, we Americans wanted to sell as much as we could to every other country, so we embraced free trade as economic dogma. What that ignored, however, were several key elements of national security. Do we want our future air force to consist of planes built by other countries? Do we want to be dependent on Japan and China for steel? Should we just shut down our ship building capability because we can buy ships for less than we can make them? We already buy most of our computer chips from Taiwan. What do we do if China invades Taiwan? The leading artificial intelligence chip maker NVIDIA is an American company whose chips have been largely made in Taiwan, but it is now building an immense production facility in Phoenix. Shouldn’t we encourage this kind of on-shoring of production of things that are critical to our national security?  Tariffs are an important and legitimate tool.  Protectionism shouldn’t always be a dirty word. Certain industries deserve protection.

In enthusiastically reintroducing tariffs as a tool of American policy, Donald Trump has done us a great service. Tariffs can be a blunt instrument, or they can be a sharp one. Some of the claims made about the tariffs we pay when President Trump had that splashy “Liberation Day” ceremony in the Rose Garden were specious. Many of the calculations of what tariffs other nations charge us were faulty and exaggerated, but they launched a reexamination of tariffs and the principle of reciprocity, and for that he should be praised.

In delegating the complex negotiation of fine points to Secretary Bessent, he selected someone who is technically adroit and able to refine the tariff package into something more rational than blanket tariffs on everything produced by a  given country. Tariff may not be the single most beautiful word in the dictionary, as the President has claimed, but it’s a good one. Tariffs deserve the thoughtful analysis that is now being applied, and for that, the President deserves our appreciation.

(Colin Hanna is President of Let Freedom Ring, USA)