On Tariffs, Hold the Hysteria

President Trump said last week that he intends to use powers granted him by Congress to impose import duties on steel and aluminum. That was all it took for the press to become free traders. Gloom and doom are everywhere, as reporters gleefully tell us how our trading partners are planning to retaliate and how Trump’s tariffs will damage the economy. I don’t recall a similar reaction when it was Democrats who were the leading protectionists.

I am anti-protectionism, but I am also anti-hysteria. It’s not as though tariffs are an unknown phenomenon. As many have pointed out, President George W. Bush imposed tariffs of up to 30% on steel in 2002. They remained in effect for more than a year. And Ronald Reagan restricted imports of steel in 1984, and later imposed a 100% tariff on some Japanese electronic products. Somehow the republic survived.

And it isn’t as though tariffs and import quotas have become extinct. Imported clothing is subject to tariffs averaging 10% to 15%, and we have a domestic sugar beet industry, I believe, only because of quotas on cane sugar from the Caribbean. I haven’t noticed the press agitating to get rid of the tariffs we already have, even though the same economic arguments they now make–newly-discovered in some cases–would apply equally. Nor do I recall the press rushing to condemn Bernie Sanders’ protectionist views during the 2016 campaign.

This is all about President Trump, of course. If Trump came out for a big increase in the minimum wage, the Washington Post would suddenly realize that it would increase unemployment among minority youths.

So let’s see what happens. Let’s see what order President Trump signs next week, and how other nations respond. Let’s see what negotiations Trump enters into with, for example, China. I think it likely that Trump is rattling sabres over tariffs in order to set the stage for improved trade deals or other concessions–in order, for example, to pressure China to start respecting our intellectual property, a huge issue on which the Obama administration was shamefully supine.

All of this will take some time. If it turns out that Trump’s policy is sheer protectionism, I will criticize him for it. But I suspect that, like President Reagan, Trump is using trade policy to set the stage for addressing inappropriate conduct by other nations. Let’s see what Trump can get out of his tariffs before we begin to tote up the balance sheet.

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