This past election has revived interest in an antiquated policy that was once dumped on the garbage heap of history. You’ve heard about it on the news, read about it on Facebook, and saw it on Twitter. It’s been popularized by sayings like, “Buy American, Hire American”, but followed up with little explanation.
That’s right- I’m talking about tariffs.
Promising to be a purveyor of productivity and profit, politicians like Trump would benefit from a history lesson or two. Protectionist policies like tariffs and duties on goods have proven, not only to be pernicious, but anti-American, preventing businesses from reaching a potential that’s only possible when they’re not held back by the big hand of government regulation.
Though Trump has proposed many numbers on what tariffs should be today, his current idea– an executive order to raise all import tariffs to 5 percent- still hurts Americans and their businesses. Here’s why:
Tariffs will prevent Americans from fully recovering from our last recession. Despite claims that the country is back on its feet, statistics show that a large percentage of the country still hasn’t returned to pre-recession levels of employment, economy and home values. This isn’t thriving- it’s a crawl out of a pit. Tariffs- aka taxes- on goods imported leaves less money in the pockets of Americans to help change these numbers. More taxes on goods equals less money to be spent in our economy. So why do those claiming to benefit Americans want to push protectionist policies that take money out of our pockets and in turn, businesses? Many cite American growth despite protectionism but conveniently leave out factors such as western expansion and the enormous influx of immigrants after the first tariff of 1789. In reality, Americans were burdened by several tariffs the first century and prospered despite those burdens.
Tariffs violate the consensual business relationship between two people or parties. For years, republicans, conservatives, and libertarians have wanted big government out of their lives, and for good reason. The government was created to protect and guarantee our rights, not take them away from us. By imposing tariffs, via congress or executive order, a private business transaction between two consenting parties is infringed upon. To watch those so enraged toward government interference with a baker’s right to refuse service to a gay couple, yet enthusiastically giving up their own rights to free trade with whoever is dismaying. At it’s roots, protectionism is a violation of rights. The move toward the center is substantially a betrayal of the values our founding fathers envisioned. In fact, British taxation through tariffs on Americans contributed to the Revolution, or have we forgotten the Boston Tea Party?
Tariffs actually reduce profit and productivity. The current tariffs on Chinese goods are 2.5 percent on agricultural products and 2.9 percent on non-agricultural products. Even just a 5 percent tariff on these would double the taxation on Chinese products coming into the United States. If that doesn’t mean much to you, consider the fact that China provides the United States with more than 90 percent of its imports. A doubling of the tariff rate may not only mean less in our pockets but a trade war in which China retaliates with its own higher tariffs.
Tariffs were initially created to either create revenue for American businesses or protect them from cheaper goods elsewhere, allowing for more productivity on our soil. Tariffs don’t accomplish either of these. Not only do businesses become dependent on trade barriers like tariffs, by making it impossible to be competitive in the market, they actually lead to a reduction exports and jobs.
Consider the fact that imposing tariffs is a domino effect: raising tariffs on imports only benefits other countries if they raise their own tariffs on American imports. Higher export costs equal less money for jobs and consequentially, productivity. How can tariffs on foreign imports increase American jobs if it’s costing us the very thing we strive for?
The nearsightedness of our politicians is no match for reality, and the reality is this: free trade isn’t a barrier to Americans, but the true assurance of its success and freedom.