No to Trade Barriers
Protectionism doesn't protect Americans.
No, President Trump, it's not true that if you tax imported steel, we "will have protection for the first time in a long while."
The opposite is true. If you raise tariffs on steel and aluminum, you punish consumers.
Yes, such tariffs also punish Chinese producers and protect some American businesses and workers, but the tariffs will hurt many more Americans.
They'll hurt every business that makes things from steel or aluminum. They'll hurt most everyone who buys anything. Tariffs are taxes, and they don't just affect inanimate metal objects. They punish people.
Even if China "dumps" products—sells below their manufacturing cost—that just means that China hurts its people and gives us discounts. We win. We get products. All the Chinese get is paper with pictures of American presidents printed on it.
What can they do with those? Either buy our products, or invest in America. Either way, we win.
Did we learn nothing from what happened when President George W. Bush raised steel tariffs? The trade barriers protected 1,000 jobs.
But they destroyed 200,000 other jobs. Bush wisely withdrew the tariffs.
Trade only happens when both sides think they are better off for making the trade. Win-win, or it doesn't happen. Trade is always good because it is voluntary.
Adam Smith figured that out more than 200 years ago.
But when Trump thinks about trade, he just sees downsides. "Before NAFTA [lowered trade barriers], there were 285,000 autoworkers in Michigan," he says. "Today, that number is only 160,000!"
Trump is right about the jobs numbers. But autoworker jobs disappeared because of automation, not trade. Robots replaced some workers.
But thanks to trade, most of those workers found other, often superior, jobs. Total American sales of cars and car parts are up.
It's shortsighted to look at costs or trade without acknowledging the even larger benefits.
NAFTA made today's avocado craze possible. American avocados are scarce in winter, but Mexico grows them year-round. Today, American producers sell about as much avocado as they did before NAFTA, but thanks to trade, avocados cost less than they would otherwise, and Americans eat four times as many of them.
Trade makes iPhones affordable, too.
Apple buys minerals from 63 countries. It ships those minerals to 34 different countries for processing.
Apple could do more of that in the United States, but every place offers different skills. Turkey and China are good at smelting. Digging through rock is cheaper in Mongolia, and so on.
This doesn't cut the U.S. out of the process. The highest-paying jobs are those held by techies who design the software and program the phone. Most of those jobs are in the USA. It's foolish to "protect" old-fashioned jobs by robbing new workers of better jobs.
The U.S. shouldn't cling to expensive, outdated ways of producing things. We should adapt to the new jobs that America does better—high-end machinery, energy, and intellectual property like movies, music, medicine, internet startups, etc.
Not only do Americans make more money doing those things, also they are safer in those better jobs. Do you want your kids to work in factories? That's often dangerous and physically demanding work. I bet you'd prefer they take the new jobs.
Yes, trade hurts some Americans. Some without new skills, or the right training, will struggle.
But many, many more are better off—much better off—because of trade.
On my Twitter feed, Trump supporters trash me for writing that. They like it when the president talks "tough" about foreigners. It helps politicians to sound like they're getting tough on something, and trade is a popular target.
"There has never been a trade deal as bad as NAFTA," said Trump. He promises to "fix" it and, as always, he sounds confident. But his plan is not the answer.
The ideal NAFTA reform would be elimination of tariffs—no government involvement in trade at all.
We'd all be richer if that happened.
COPYRIGHT 2018 BY JFS PRODUCTIONS INC.
