Let's Be Serious, President Trump Is Certainly No Free Trader
President Trump has done serious harm to our economy with this fight with China over tariffs.
The latest news on this front is that our Economist-in-Chief, has slapped a 15% tariff on $110 billion in Chinese imports on Sunday. Included in this protectionist venture were watches, clocks, TVs, video monitors, apparel, textiles, footwear, washing machines, frozen sweet corn, pork liver, marble and bicycle tires. He plans to do the same on December 15, 2019 with a similar tariff on another $160 billion in Chinese goods, this time involving laptops and cellphones. This comes in the train of previous 25% duties on $250 billion of Chinese products, mainly machinery and industrial products.
What are the costs of this maniacal economic war?
Econofact’s estimate of the burden is between $300 and $800 a year for the average family. Economists Kirill Borusyak at University College London and Xavier Jaravel and at the London School of Economics place this figure at roughly $460 per year. According to J.P. Morgan, the average U.S. household will pay $1,000 a year, and this study was conducted before the latest incursion.
Some say that Donald Trump is really a surreptitious free trader. Yes, he is establishing barriers to trade with other nations, but only as a furtive attempt to promote zero tariffs. On the face of it, this sounds absurd. Yes, you can get from New York to Chicago by travelling east, not west, but to think this is a reasonable travel plan beggars the imagination. Milton Friedman, no fake free trader he, recommended a unilateral declaration of free trade with all countries, whether or not they followed suit. Donald Trump’s stance is just about 180 degrees away from that sage advice.
Yet, what are we to make of these statements of our Esteemed Leader?
At the G7 meeting in 2018 he said: "No tariffs, no barriers, that's the way it should be. And no subsides, I even said not (sic) tariffs. Ultimately that's what you want, you want tariff free, no barriers, and you want no subsides because you have some countries subsidizing industries and that's not fair. So you go tariff free, you go barrier free, you go subsidy free, that's the way you learned at the Wharton School of Finance."
Nor is he the only one making this point. Mr. Trump has also garnered support for this contention from Club for Growth president David McIntosh who stated:
“And what we like about President Trump’s vision on trade is his goal of zero-zero tariffs. We support that strongly. And I kind of have come to recognize, these tariffs are his way of forcing the Chinese to come to the table. They’re costly. And we want them to go away. But he’s using them to get to that ultimate goal of zero-zero tariffs.”
Another defender, who really ought to know better, is Lawrence Kudlow, who opined: “President Trump … (has been) … leading a tough campaign to reduce trade barriers… (He) … continues to seek his long-term vision of free, fair and reciprocal trade through zero tariffs, zero nontariff barriers and zero subsidies.”
So is President Trump really a clandestine free trader? No. For every word he uttered in this vein, there must be a million in the exact other direction. The American public is just going to have to get used to the fact that this man often contradicts himself, sometimes on the same day, even, in the very same sentence. The statements from both him and Messrs. McCintosh and Kudlow notwithstanding, it is extremely difficult to accept the hypothesis that Mr. Trump secretly yearns for full free trade.
First, he shows no evidence of understanding even the basics of trade theory. He wouldn’t know comparative and absolute advantage if these doctrines bit him in the nose.
Second, he worries, continually, about trade deficits with specific countries, and revels in trade surpluses. His nightmare is that China, or any other country, will sell to us more than they buy from us. Yet, I have a big deficit with McDonalds and Walmart (I purchase burgers and groceries from them; they have not yet spent a penny taking my economics classes). On the other, I am running a large surplus with my employer (they pay me a decent salary; I pay them a small amount for parking privileges). The point is, no one loses from such imbalances, nor beats anyone else on their basis.
Third, although every once in a while Trump utters platitudes about free trade, he does so rarely. If he were serious about this, he would be front and center about it. He would tell the Chinese, continually, that his goal is zero tariffs, and he is only raising them, now, to this end. Don’t hold your breath.
