Tariffs are terrible -- always
The best reciprocal rate for tariffs on imports for everyone is zero. Like so many things government does, tariffs hurt consumers. They drive up the prices of domestic products and reduce choices.
Let trade be free.
President Trump doesn’t believe it or understand it, but tariffs are always harmful to consumers in the country that imposes them, as Milton Friedman, speaking for 99 percent of the sane economics world, clearly explains.
Tariffs don’t just make imported things more expensive for a consumers of things like foreign cars or wine. They benefit domestic producers by eliminating or hurting their competition from overseas.
As Friedman said:
Tariffs aren't new—neither is the misguided notion of "reciprocal" ones. Milton Friedman cut through this fallacy with clarity: When other nations restrict trade, they harm their own citizens. When we respond with our own tariffs, we merely punish our citizens, too. After all, you don't fix holes in the bottom of the boat by shooting more holes in it. Free trade benefits America regardless of what other countries do. Refusing to buy something at the best price available is simply bad business.
Imagine if we had had super-high tariffs in the 1970s that protected our horrible car companies and tire companies.
We'd still be riding around in huge, lumbering unsafe road-boats with non-disk brakes, non-radial tires and rear-wheel drive. Union auto workers would be making $220k a year.
In the last 40 years foreign trade/competition saved our electronics biz, our camera biz, our phone biz -- we'd still have 20-pound black dial-up phones attached to long wires coming out of a wall.
Foreign trade/competition saved our pop music biz. We'd never have heard of the Beatles or Stones if British music had been highly tariffed.
For 70 years the USSR effectively had super-high 'tariffs' -- they didn't let anything come across their borders that wasn't smuggled.
When it collapsed in 1991 the Evil Empire was a poverty-stricken, economically backward, open-air prison bereft of basic consumer products frozen in technological time.
And somebody please send this parable to Trump HQs and have them explain it to the boss. Attach this, too, from the great Henry Hazlitt.
Amen, amen, amen.
This is my response to a person who thinks we should not challenge other country’s tariffs on our exports:
“I don’t know where you live, but I am a Midwesterner who grew up in a town devastated by our factories shutting down as the production was sent overseas. I sense you don’t care about that but I do. Trump was wrong to conflate tariffs and the balance of trade deficit the way he did but they are related. We buy cheap Chinese goods (I am certainly guilty) and we send IOU’s to China in return. China is using those IOU’s to buy up our farmland and our skyscrapers. The very essence of our country’s strength going to a potential enemy, while our own capacity to produce the weapons we need to defend ourselves decays. Are you blind to what has happened and is happening? It must change and although I didn’t vote for Trump, I do support his attempts to bring back some of our lost manufacturing to our country. Do you know of a better way to do that?”