Tariffs

Over the course of President Trump’s two terms, there has been much talk around the matter of tariffs — taxes on imported goods. However, much of the talk seems to miss the point. After all, for those of us who seek the truth, it’s not really a question of whether tariffs are ‘good’ but whether they are preferable to other kinds of taxes.

First, let’s establish the theory: the advantage through tariffs is believed to be in the ‘protection’ of jobs and strategically-important industries: industries significant to domestic defense (or, more accurately, the war agenda) and industries on which the people must be able to depend without question for their survival, and for the general stability of the economy — of course, the latter introduces some measure of subjectivity, especially in an economy whose measured output is largely “based” on consumption, services, and government spending.

Where too much foreign control over resources and industry threatens the military might and the general economic stability of the country (in the event that foreign politicians suddenly decide to disrupt trade), and where domestic interventions and ‘regulations’ render domestic industry less competitive, tariffs can theoretically offer ‘protection’. 

However, all of this operates from a whole litany of unstated and unproven assumptions, including but not limited to: (1) whether politicians (in the first place) can be trusted to clearly identify a ‘problem’ (that they likely caused to begin with); (2) whether they can exercise enough restraint to remain objectively focused; (3) whether they can be trusted to administer a remedy without causing further damage or other problems; (4) whether those in power have the capacity to offer ‘protection’ on the basis of ‘need’ (however defined) instead of special interest or political expedience; (5) whether they have the ability to objectively define the criteria and the parameters for identifying industries eligible for ‘protection’; (6) whether they have the ability to precisely establish quotas or prices so that the ‘protections’ are neither too weak (as to be ineffectual) nor too onerous (as to be punitive); (7) whether they have the ability to strictly limit the list of industries ‘protected’ in the interest of domestic security and general economic stability, without the tariff system (initially or eventually) being weaponized politically between factions or interests, or otherwise overwhelmed by political expedience and busybodies lobbying for more privileges or ‘protections’; (8) whether they have the ability to gauge and remedy failures, unforeseen externalities, and instances of abuse; (9) whether they can reliably calculate the extent to which tariffs will burden or complicate domestic industry (through logistics challenges and higher input costs), and whether measures will be implemented to take immediate action where abuses happen, trade wars escalate to the net detriment of the domestic economy, or the results of the tariffs are shown to be poor, ineffective, or too onerous to justify their continuation; and (10) whether those at the head of the ‘protected’ industries can reasonably be expected to do the ‘right’ thing, as opposed to exploiting public policy for personal gain without doing their “patriotic duty” in return.

After all, it is because of a vague sense of “patriotic duty” that consumers are expected to shoulder the added burden passed on to them in the form of tariffs. 

However, the select industries enjoying that ‘protection’ rarely reciprocate in honoring that privilege — which disproportionately affects middle- to low-income consumers, relative to their incomes — by returning the favor through improvements in quality or lower prices in the future. 

Instead, it is merely assumed that those at the head of domestic industry will always do the right thing in response to these measures, or that the ‘jobs’ created or ‘protected’ suffice to uphold their end of the bargain — forgetting the jobs and opportunities destroyed in the process.

Of course, in practice, these measures have the effect of eliminating competition and hampering supply, increasing costs and keeping them higher, reducing quality and disincentivizing improvements, stifling business prospects for smaller or fledgling enterprises, and preventing the allocation of labor and resources to more efficient ends that might otherwise result in innovation, economic expansion and new industries — the latter detail is especially critical for a country in the midst of a sovereign debt crisis, relying on its maintenance of that illusion of an expanding economy capable of servicing its debts.

Despite their dubious effectiveness in contributing to some patriotic cause or promoting the ‘general welfare’ — especially in a country weak in its sense of community and patriotism — tariffs are still a far more efficient tax mechanism than any tax on productive activity or capital formation. So, to the extent that the state must generate tax revenue, it is best generated through that mechanism which discourages spending and which is generally avoidable: the first of these is part of sound economics; the second is based in the same, as well as good morals.

With this in mind, the most urgent questions are not whether tariffs are ‘good’ or ‘bad’ but whether we can count on them being something other than just another tax; whether they can generate enough revenue in practice to help balance budgets and offset more onerous taxes; whether the vision for the ‘new economy’ justifies, accounts for, and can suffer the risks of a contracting economy in the midst of a sovereign debt crisis; whether restructuring the domestic economy toward greater ‘self-reliance’ is worth the costs; and (to the extent that tariffs succeed in generating that revenue, and to the extent that they are essentially unavoidable) whether middle- and lower-class Americans, already heavily taxed, buried in debt and totally consumed by a kind of hedonistic materialism, can even afford them or otherwise personally justify sacrificing or cutting back for something as abstract as a more stable and self-reliant future.