Say "No" to Tariffs

You’re a bargaining chip of the United States government.

You’re the one who pays more for groceries. Drives less often to conserve gasoline. Frets over skyrocketing utility bills. Pleads for higher wages employers can’t afford to give.

You’re a soldier in President Trump’s trade war. And chances are, you were drafted. When you went to the ballot boxes last November, did you know you were signing up to become poorer?

Tariffs, or import taxes, are Trump’s deadliest weapon in his ongoing trade war. Economists recognize two types of tariffs: protective tariffs, which are thought to encourage industry in the home country, and revenue tariffs, which raise money for the federal government.

Trump has invented a third type of “reciprocal tariffs,” popularly christened “retaliatory tariffs.” They’re meant to discourage foreign tariffs on U.S. exports. In fact, they punish other countries for their confidence in the U.S. market, for daring to price their goods cheaply and provide them in plenty. They also punish U.S. consumers for their wealth, for the crime of seeking a good deal abroad.

“Deadweight loss,” a rather spooky technical term, is why you can’t afford a new car. This is the value of transactions that never take place due to some distortion in the market. Tariffs are a powerful distortion, raising producers’ input costs and raising sticker prices for consumers. Those who would have purchased goods at the lower prices will have to do without, and producers who would have gotten the check must swallow the loss. The result is a decrease in net social welfare: deadweight loss.

Economies depend on predictability, and Trump’s tariffs are anything but predictable. The formula, in English, is the trade deficit divided by imports divided by two.

No idea what that means? You’re in good company. Economists are confused, too.

“The formula is reverse engineered to rationalise charging tariffs on countries with which the US has a trade deficit,” Thomas Sampson, London School of Economics, told BBC. “There is no economic rationale for doing this and it will cost the global economy dearly.”

So much for “reciprocal” tariffs. The formula doesn’t even consider what tariffs other countries have imposed on the U.S. Just ask Israel, which obligingly dropped its import taxes to zero and was still slapped with a 17% tariff.

Policies in a healthy economy should be “general, certain, and equal,” as economist F. A. Hayek put it—impartial, clear, and applicable to all. Trump’s tariffs violate all three principles. They benefit certain U.S. manufacturers at the expense of importers. They are difficult to predict and nearly impossible to calculate. And they disproportionately affect the poor, since low-income consumers are the ones who gain the most from low, free-trade prices.

Trump has every right—and every duty—to wage war on behalf of the United States (though a real war should require Congressional consent). It’s true that our allies have long taken advantage of our willingness to cover their expenses, and our enemies have profited from our wealth and appetite for consumption. Perhaps it’s time justice is done. But forcing American citizens to suffer the consequences of a trade war is akin to reviving the draft.

After all, it’s your family. Your job. Your food. Your running water. Your house. Your car. These are Trump’s sacrifice on the altar of international justice.

And you don’t get a vote.