This last installment of our tariff Agsplainer deals with the non-economic consequences. By choosing which industries should be protected from competition with tariffs, governments essentially choose which citizens are more important than others. Steelworker jobs are not more essential than other jobs to our economy and identity. Look at the tiny number of jobs supposedly protected by tariffs compared to the large number of jobs in steel using industries that are at risk from tariffs.
The steel tariffs, while done under national security legislation will do little to improve our safety. Trade interventions such as tariffs, quotas and embargoes are also imposed to achieve non-economic goals, such as the grain embargo against the Soviet Union to protest the invasion of Afghanistan.
Tariffs are like farm subsidies, costing millions of Americans a few dollars, but benefiting a few thousand citizens greatly. Such redistribution programs are always controversial. Meanwhile, thousands of other jobs are created and eliminated every year as our economy changes. It is far more efficient to let market forces pick winners and losers as opposed to government officials. It is also less hazardous for political careers.
These divisions are not confined to domestic favoritism. Consider the potential damage to our relationship with Canada and Mexico. Even if ruthless and ineffective tactics like unilateral tariffs wring some concessions from these steadfast neighbors, we’re probably going to be living next to them for a long time. Any farmer who has inherited a fence line squabble from their parents or grandparents knows how hard it is to rebuild a good working relationship.
Tariffs are tempting choices because we want immediate action and truly fruitful trade negotiations take long and excruciating effort. Tariffing authority has largely been ceded to the executive branch by Congress, as part of enabling speedier trade talks. But with this hammer, presidents too often see every trade problem as a nail.
Scott Lincicome, an international trade attorney with The Cato Institute, from whose copious research and writing I have shamelessly and frequently borrowed, sums up tariffs succinctly and elegantly:
“Tariffs not only impose immense economic costs but also fail to achieve their primary policy aims and foster political dysfunction along the way”
And yes, you can get that on a Tee Shirt.
Read John Phipps' full Tariff Agsplainer series.
John Phipps' Tariff 101: An Explanation of How Tariffs Work
John Phipps' Tariff 102: Do Tariffs Accomplish Policy Goals?