by Alex Witoslawski
President Donald Trump announced last week that he plans on slapping a 25 percent tariff on steel and a 10 percent tariff on aluminum. Everyone seemingly lost their minds in response.
Republicans and Democrats, conservatives and liberals, and the mainstream media all had the same reaction: they universally opposed it. Where’s the other side to this story? The fact that no mainstream media outlet, politician, or think tank “economist” is willing to even mention the other side of the story should raise questions in every critical mind.
Clearly the political and media establishment are all on board with free trade. But why? There’s rarely universal agreement on any economic issue—Democrats want a higher minimum wage while Republicans are opposed to it; Democrats want higher taxes while Republicans want lower taxes; Democrats want more regulations while Republicans want fewer regulations, etc. So why is there nearly universal agreement on this one issue?
Even basic facts that could paint the tariffs in a positive light were blacked out by the mainstream media—for example, I ran various Google searches trying to find how much tax revenue these tariffs would raise, browsed through dozens of articles, and could not find a single answer to my question. What I did find, however, were numerous articles from various news sources and think tanks detailing how Trump’s aluminum and steel tariffs will harm U.S. industries, how the costs of these tariffs will be passed on to consumers, and how even beer will be more expensive as a result. Oy vey!
When was the last time you could find left-wing news and opinion publications like Slate, New York Times, Vox, and NPR parrot virtually the same talking points as allegedly right-wing publications like National Review and The Weekly Standard? On every other economic issue there at least seems to be some sort of partisan divide, where two different sides go head-to-head in a public debate.
Indeed, on this issue there does seem to be a divide in public opinion, as nearly 60 percent of Americans support Trump’s tariffs according to a Morning Consult poll. But no one in the mainstream media, think tanks, or the political establishment are willing to give voice to those Americans. It’s almost as if all of these institutions represent the interests and the narrow range of opinions of a small influential elite who own, operate, fund, and attempt to use them to shape public opinion—but I digress.
There are many reasons why someone could support some tariffs while also understanding the economic case for free trade. I’ll discuss just two of those reasons here.
First and foremost, tariffs are one of the most efficient forms of taxation. Unlike personal income taxes, they do not tax work. Unlike corporate taxes and capital gains taxes, they do not tax capital or savings. Unlike payroll taxes, they do not tax employment. Unlike property taxes and the death tax, they do not tax wealth. Tariffs are simply a tax on foreign goods. They do not punish work, capital, savings, employment, or wealth. They may raise the final cost of goods, but in this regard they are not much different than consumption taxes. And yet, ironically, we see organizations that would never in a million years support any tariffs—organizations like Cato and Heritage—supporting some form of consumption tax. Why the double standard?
If I were given the choice, I would choose higher tariffs in exchange for lower taxes of other kinds in a heartbeat. And this is, essentially, what President Trump did—he lowered personal income and corporate taxes by signing the GOP’s tax reform bill and he’s replacing some of that lost tax revenue with higher tariffs on certain goods. On net, the average person and the average business are still seeing a reduction in their taxes. What’s the harm in that?
This is reminiscent of the tax system that the United States had prior to the implementation of the income tax—the federal government relied almost entirely on revenue from tariffs, and the country did just fine. In fact, the country prospered. We experienced the Great Leap Westward and the Industrial Revolution. We went from being a rebel colony on the edges of civilization to one of the greatest powers in the world during this time period. The reality of that time is quite different from the apocalyptic “OMG if you slap a tariff on something that will cause a trade war and the end of all modern civilization” narrative that we are so often spoon fed by the mainstream media.
Secondly, there are national security reasons why we might want to levy tariffs on certain products. We couldn’t have won World War II, after all, without mass industrial production of tanks, guns, jeeps, ammunition, and other things. There is something to be said for levying tariffs solely to keep certain industries in the United States—industries like steel and aluminum could prove useful if we are ever cut off from trade in that particular resource during a war. Maybe our trade routes become laden with submarines, maybe the main country that supplies our steel goes to war against us, or maybe they manage to blockade the ports of our main trading partners—who knows what could happen?
In addition to this, the skills of the workers in these industries could prove useful as well. For example, in our next major war we may not be cut off from steel or aluminum but maybe we’ll need more skilled labor to produce tanks and planes—welders, machinists, millwrights, and so on. Where do dogmatic free traders think we’ll get this skilled labor? Do they really think that a bunch of wimpy coders in Silicon Valley, political operatives in D.C., or Women’s Studies majors working at Starbucks will fill this labor shortage during a time of war? It takes time to adequately train workers to fill these roles, so keeping some of them around may prove useful in the future.
When I’ve brought this point up in discussions with free trade dogmatists, I usually get some kind of hand-waving dismissal in response. They don’t even want to consider the point. They seem to think that America will always be on top, that we’ll never falter, that we’ll never have a serious competitor to our current worldwide hegemonic power. This seems to be the dominant mindset in the beltway, in the heart of American political power, and that’s an extremely dangerous mindset for our country’s political class to have.
This is, of course, a discussion about costs and benefits. So perhaps after a long discussion regarding this topic we come to the conclusion that the costs of a tariff don’t outweigh the national security benefits of keeping certain industries safe from foreign competition. I’d be fine with that—my issue is that we’re not having this conversation at all. No mainstream publication or think tank is discussing this issue in an honest fashion, choosing instead to bash strawmen and mislead the public.
That said, I do think that after a vigorous public debate the public would choose to side with more tariffs, not less. We should aim to cut domestic taxes and replace the lost tax revenue with higher tariffs. It would be a more efficient form of taxation, bring back important industries, spur economic growth as a result, and leave our country more secure from foreign threats.