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Trump Wants to Have it Both Ways on Trade. He Can’t.

Tariffs and import restrictions are the equivalent of putting sanctions on your own country.

Donald TrumpHiroyuki Watanabe/Jiji Press/NewscomNo one would ever accuse Donald Trump of meticulous adherence to the rules of formal logic. But even the president ought to realize the strongest argument against Trump's tariffs on American imports has been made by Trump himself.

In early May Trump announced the U.S. was withdrawing from the Iran deal. Among other things, this means the re-imposition of sanctions—the "highest level" of sanctions, as he put it, which he said would be "crippling." Those sanctions include efforts to block Iranian oil sales, limits on Iran's ability to access international banking systems, and measures to prevent Iran from trading with other countries.

That last provision would "have a swift effect on some big companies," Fortune reported. Among them: Boeing and Airbus, which "had been planning to start selling aircraft to the Islamic Republic for the first time." General Electric also will be hit hard: "Not only is it one of the U.S. companies making parts for Airbus, but it has also received big parts orders for oil and gas facilities in Iran." Volkswagen had started selling cars in Iran, and might have to stop. Ditto for the French company that makes Peugeots.

Sanctions such as these will hurt Iran, the administration and others argue, by depriving it not just of oil revenue, but of consumer goods and opportunities for employment.

As one analysis by the Foundation for Defense of Democracies put it in 2014, when the Obama administration was easing sanctions as a carrot to entice Iran to negotiate, the easing of sanctions provided "economic relief. ... The value to the Iranian economy of sanctions relief ... includ[es] employment growth. ... [A] sanction relief provision that allows for the resumption in imports of auto parts ... promotes economic growth since auto parts are used to build cars for domestic consumption. ... [T]he suspension of sector-specific sanctions also provide a boost through facilitating imports into Iran."

Easing import restrictions, the analysis said, made an "equally, if not more important" contribution to economic growth than increased oil sales.

Reimposing sanctions, as Trump wants to do—including sanctions that limit imports—therefore will hurt Iran's economy and put pressure on the company's leaders to change their ways.

But that is the precise opposite of what Trump says about the United States. When it comes to America, the president claims limiting imports will help the country.

And he has been doing that a lot. When the administration slapped tariffs on washing machines and solar panels, Robert Lighthizer, the administration's trade representative, claimed it was part of the administration's efforts to "defend American workers, farmers, ranchers and businesses."

When the administration slapped tariffs on steel and aluminum, it claimed doing so would "reduce our reliance on foreign producers" and protect "our national security" by lowering imports that have the effect of "displacing domestic production." It argued that imports "are weakening our internal economy." And it suggested the tariffs were part of the administration's efforts to "promote American prosperity."

Now the administration is considering whether to hit foreign auto imports with a 25 percent tax, on the grounds of national security. "Core industries such as automobiles and automotive parts are critical to our strength as a Nation," Trump said.

Trump's cheerleaders agree. As one of them put it recently on the pro-Trump blog American Greatness, "America needs to impose large tariffs to discourage its advanced industries from moving abroad."

Well, you can see the problem. When America limits imports to Iran, that is—by Trump's logic—very, very bad for Iran. "Crippling," in fact. It reduces economic growth, stunts employment, and makes the populace miserable.

Yet when America limits imports to America, that is—also by Trump's logic—very, very good for America. It protects the domestic economy, creates employment, and makes the public much better off.

Using Trump's reasoning about tariffs, one could just as easily argue that sanctions on Iranian imports defend Iranian workers and businesses, reduce Iran's reliance on foreign producers, and protect Iranian national security. Using Trump's reasoning about sanctions, one could just as easily argue that tariffs will cripple the American economy and punish the American people.

The truth is that trade restrictions are indeed harmful—for both sides of the exchange. Limits on sales to Iran will hurt Iran, but they also will hurt Boeing, GE, and other companies. Likewise, limits on imports to the U.S. will hurt foreign producers, but they also will hurt U.S. consumers.

Trump, typically, wants to have it both ways. There's just one thing keeping him from doing so: reality.

Photo Credit: Hiroyuki Watanabe/Jiji Press/Newscom

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  • loveconstitution1789||

    Getting China to adjust its policies toward the USA relating to our managed trade would be better for Americans in the long run.

    Getting Iran to adjust its aggressiveness in nuking the USA would be better for Americans in the long run.

    Getting North Korea to adjust its aggressiveness in nuking the USA would be better for Americans in the long run.

    MAGA!

  • Curly4||

    Your statements is the very thing that Trump is trying to do and receiving all kinds of h*ll form almost all news media and commenters.

  • BYODB||

    The bizarre thing is few outlets seem to even think the two are at all related, and it's because they have full blown TDS. You can be against the tariffs, but what's being attacked by media outlets (including Reason) is a literal strawman.

    They don't want to even discuss if Chinese tariffs is a worthwhile sacrifice to bring North Korea to the table. No discussion of the merits whatsoever. Instead, just put forward a narrative about what your tea leaf reading has revealed and discuss that instead.

    And, to the media's credit, almost no one seems to have noticed that their Folgers was replaced with dog shit.

  • ||

    And again not to mention that at this point, China is pretty much a communist dictatorship in the vein of USSR, Venezuela, Cuba, etc.

    But it's probably best just to go with the blind optimism that it'll work out better this time than it did last time. We're Americans, as long as we participate freely and equally, toe the party line, I'm sure nothing bad could happen to us!

  • Wizard4169||

    China is strongly authoritarian, but they are in no way communist. (I don't care if they still call themselves "communist". If I called myself a race horse, would you bet on me to win the Kentucky Derby?) Unlike the leadership of the USSR, Cuba or Venezuela, the Chinese leadership was bright enough to see that their socialist policies were producing little but poverty and misery. They managed to ditch the worst of their old system while still maintaining a monopoly on political power, and even a tightly restricted free market made them hugely richer. You may not think this is a very good way to run a country, and I certainly wouldn't want to live under such a system, but clinging to outdated hysteria about communism utterly misses the point.

  • Chipper Morning Baculum||

    Because it is economic stupidity. But carry on, clingers.

  • loveconstitution1789||

    As opposed to stupidity relating to history and international relations?

  • Wizard4169||

    We may never reach peak derp, but you're clearly trying. Please explain to me how China is hurting us by selling us cheap stuff. If you can come up with a coherent explanation for that, I'll cheerfully buy your plans for a perpetual motion machine.

    The idea that North Korea or Iran is planning to nuke the US is just beyond preposterous. The Norks wouldn't give two shits about the US if not for the military forces we have positioned on their doorstep. The presence of those forces is also the only reason they're even in a position to hurt us at all. Let's say they did develop ICBMs that could reliably deliver nuclear warheads to CONUS. Their handful of weapon might hurt us badly, but one US missile sub could make everything from the 38th parallel to the Yalu glow in the dark. Is Kim Jong Un a pretty horrible person? Sure. Is he willing to go full Kamikaze and destroy his country and himself just to hurt us? I doubt it, and yes, I am willing to bet my life on that.

  • Wizard4169||

    Much the same is true of Iran. The idea that they'd start a nuclear war with the US, especially when they have plenty of problems closer to home, is flatly stupid. The evidence that Iran ever had a bomb project is shaky at best. Even if they did, it was pretty thoroughly shut down. Except that since Trump didn't make that deal, he was determined to shit on it. Which he did, thereby removing Iran's biggest incentive not to pursue weapons, even as continued threats gave them more reason to want a bomb. Brilliant!

  • sarcasmic||

    Taxes that make stuff we Americans buy more expensive will make those damn Chinese play straight!

    And if that don't work we'll make that stuff even more expensive!

    That will teach them damn chinks! Make their stuff even more expensive until we buy it!

  • You are very stupid||

    Or so expensive we stop buying it.

  • Curly4||

    So the US should let every nation under the sun charge high tax on what the US ships to them and then the tax a very low tax on what these other nations ships to the US?
    Well, that is what the rest of the world thinks of the US. The US is just a source of paying high prices for their products and a place to dump their excess products and a source of a military anytime they need one without having to maintain a military of their own.

  • You are very stupid||

    I like how I made a simple observation and you turned it into a tirade on what you think I said vs what I said.

  • loveconstitution1789||

    He's pointing out that the USA is not trading in a vacuum.

    Free trade would be the best but we currently have managed trade. We also have North Korea and Iran destabilizing their respective regions where the USA... trades.

    Maybe if you wish enough those bad guys will allow the USA to pay even more for products from other countries that put tariffs and non-American rules on US goods and services.

  • ||

    I didn't consider it to be a statement pro- or anti-tariff as it's a value neutral statement of (hypothetical) fact. China doesn't want us (borrowing and) spending less on their products any more than we want them to stop selling us cheap crap.

    Arguably, he's talking about a re-orienting to less controlled market pricing. One where China's production is more rightly or equally/humanely valuated next to US production.

  • You are very stupid||

    That's correct mad.

  • Wizard4169||

    So, because other countries insist on punching their own citizens in the collective nuts, we Americans should be punching ourselves in the nuts, too, just to show them?

  • John||

    The truth is that trade restrictions are indeed harmful—for both sides of the exchange. Limits on sales to Iran will hurt Iran, but they also will hurt Boeing, GE, and other companies.

    Sure. But stopping people from selling to your enemies always does that.

  • Curly4||

    The problem is would it be more hurtful for Iran to go nuclear with the means to deliver these nuclear weapons any where in the world or would it be more hurtful for Iran to be sanctioned and nations that trade with Iran to be sanctioned as will until Iran surrenders its plans to become a nuclear nation.
    If Iran is allowed to become a nuclear nation then why should any nation be denied that privilege including North Korea?
    Now if trade restrictions are hurtful then maybe the US unilaterally drop all trade restrictions to all nations.

  • Ken Shultz||

    One way in which Trump's new round of announced tariffs against China are exactly like Iran putting in place sanctions against the U.S. is that neither of them has actually happened.

    Trump has a round of trade talks with China scheduled for next week. Trump has an upcoming summit with North Korea, in which he needs China's support. That Trump has announced these tariffs ahead of those talks and to be implemented after those other meetings are complete should be telling.

    He's done this before only to change course when Beijing cooperates (e.g. ZTE). You need a carrot to hold out in front of the mule--and a stick. Trump just gave himself another stick. Looks like that's what's going on here. You may have noticed the navy just took a sight seeing cruise through China's disputed magically appearing archipelago in the south China sea over the weekend, too.

    I've repeatedly criticized Trump for playing brinkmanship with trade policy, but, fer goodness' sake, if you can't even acknowledge that this is what he's doing with security policy and North Korea, then how can you even discuss these tariffs intelligently?

  • BYODB||


    ...then how can you even discuss these tariffs intelligently?

    'They' don't want to discuss it, they want to create a strawman and attack that because it's easier. Full stop.

    I like free trade, but we don't live in a world with free trade. Free trade is an ideal that doesn't exist. As such, the best we can probable hope for is managed trade that benefits the United States.

    Also, it's worth pointing out that free trade isn't an unmitigated good. It has it's own set of potential problems. Namely, if you had 'free trade' you would be free to sell nuclear weapons or tanks to whomever. I see no downsides, do you? /sarc

  • Homple||

    "Free trade is an ideal that doesn't exist. As such, the best we can probable hope for is managed trade that benefits the United States."

    Most sensible comment on the entire subject.

  • ||

    Also, it's worth pointing out that free trade isn't an unmitigated good. It has it's own set of potential problems. Namely, if you had 'free trade' you would be free to sell nuclear weapons or tanks to whomever. I see no downsides, do you? /sarc

    Yup. Free Trade is why every vehicle in Wyoming meets California emissions standards and everything in the US is known to the State Of California to cause cancer. Sometimes the lowest common denominator is better than what you have and free trade is a good deal, but if all you've got is free trade you've pretty distinctly sought out and likely even enforced the lowest common denominator on a number of levels.

  • BYODB||

    Indeed. While free trade is absolutely a goal worth pursuing it's also not what's actually being discussed here. Reason similarly shoved their collective heads up their ass when Trump was talking about renegotiating NAFTA as if somehow free trade was on the table: it wasn't.

  • Kongming||

    One of the worst parts of the whole Trump Experience is watching the right bend over and become enthusiastic protectionists. I'm used to arguing for free trade with the left. I never expected to have to fight the right on this one as well.

  • ||

    Similarly the same people who, a couple of decades ago, were up in arms that American Corporatism was the next wave of imperialism suddenly don't give two shits about widespread intervention and advancing international corporatism as policy. People who used to chant "No blood for oil." now rather overtly espouse a "Fuck Syria, Boeing and GE have planes to sell to Iran." stance.

  • You are very stupid||

    Then you never understood what "two sides of the same coin" means.

  • Kongming||

    Indeed. Somehow, cynical and bitter as I am, I still managed to give the right too much credit.

  • You are very stupid||

    You could have just said "Yeah, I never did"

  • Kongming||

    I could also have said "the square root of 2 is irrational." Lots of things are possible.

  • You are very stupid||

    But what I said was relevant, and not a cheap shot deflection because I was naive.

  • You are very stupid||

    Or, alternately, you could have stopped with "indeed"

  • Kongming||

    I thought we were joking around but if you are actually being serious then, no, there is no way I could have said "yeah I never did" because I understand what "two sides of the same coin" means.

  • ||

    Despite Reason's claims to wider equivalency, in this case, they really are more "two sides of the same Mobius strip".

  • Chipper Jones||

    Republican support for free trade has unfortunately been shitty for a while:

    http://www.pewresearch.org/fac.....es-remain/

  • Tony||

    They never had any principles. Maybe abortion, but that's it. How they've managed to dupe enough voters to have control of so much of the US is beyond me and depressing. People actually believe, for example, that they're more fiscally responsible, just because they say so with their pie holes.

  • ||

    People actually believe, for example, that they're more fiscally responsible, just because they say so with their pie holes.

    You aren't paying attention and it's even more depressing that you and your moron cohort aren't getting it. Maybe some GOPers believe, but the fact that the GOP even says so with their pie holes puts them ahead of their opposition who's pie holing of fiscal responsibility policy which varies from "You didn't build that." to "Nobody needs 23 kinds of deodorant." Everybody knows that between laying a wad of bills out on the craps table, laying a wad of bills out with the guys shooting dice on the corner, and walking down a dark alley at 2 a.m. thumbing a wad of bills it's not a choice of "Are they gonna let me keep my money?"

  • sharmota4zeb||

    If you want to have fun, start a debate with a member of the ctrl-left about the "you didn't build it" speech. Then ask to borrow $20 from him.

  • sharmota4zeb||

    Trump stole Obama's protectionist retoric and believed it.

  • ||

    Trump's Tariffs Are the Equivalent of Iran-Style Trade Sanctions on the U.S.: New at Reason

    You know if someone were so inclined as to think, for just a moment, that globalism leads to more control for the Chinese government, The American Government, and The EU rather than more individual liberty, this whole 'self-imposed Iran-style sanctions' actually seems exceedingly right(eous). America would be the backwards hell hole where we don't chop people's hands off for stealing and we don't jail journalists for calling the President a racist, orange-haired baboon.

    China has a billion people under their thumb. India has a billion more. Left to seek the lowest common denominator, both of them are capable of outstripping US production 3:1, the only way we beat China and India (and others) if not economically then at least ideologically is by being more free and profitable *domestically*. I freely admit that we have some pretty fucked up domestic issues to get settled first but, ultimately, the only way the US is going to win is if, as a policy, domestic freedoms supercede foreign ones. Otherwise, we're just going to wind up sharing both economies and governments between here, India, and China, if not just another freedom-loving, (pseudo-)religious minority that China is so accepting and tolerant of.

  • BYODB||

    So I guess this continues the Reason narrative that Chinese tariffs and North Korea are entirely unrelated.

  • ||

    Not to mention that even if I 100% agree that both parties benefit from free trade benefits *and* that partners benefit equally, I'm still pretty solidly in sound, rational libertarian territory if I don't want to benefit a foreign communist regime with a now dictator-for-life on equal footing to a domestic, democratically-elected federal republic.

  • BYODB||

    If the end result of free trade is enriching and arming enemies who would gladly take us over if given half a chance and place us under communist rule, than it could even be fair to say that ultimately free trade really is only possible within national boundaries. Specifically, we need to be under Chinese rule to have free trade with China (or vise versa).

    I'm not convinced that free trade is something that can exist in between disparate nations at all. It's a pipe dream, like 'justice'.

  • Bob Meyer||

    Just as there is neither a fully free market nor a fully state controlled economy in the US, there is neither fully free or totally managed trade with other countries. The question isn't "free or controlled"? It's more free or less free.

    NAFTA was managed trade but it was freer than what came before because tariffs were lowered and goods could move more freely across the border. It made things better for Canada, Mexico and the US.

    Free trade does not benefit both sides equally. The benefits tend to accrue to the nation whose internal economy is freest. Because the flow of capital is more controlled in China than in the US, the US will benefit more from trade than the Chinese will. While the economies of poorer nations grow faster in percentage terms, ultimately it is the free flow of capital that will produce the greatest total gains.

  • ||

    Because the flow of capital is more controlled in China than in the US, the US will benefit more from trade than the Chinese will.

    Facts not in evidence. Not to disagree with your whole post but succinctly: the minimum wage across China varies from $1-3/hr. Would a $15/hr. and a repeal of China's effective gun and knife restriction policies make them more or less free than us?

  • buybuydandavis||

    "But that is the precise opposite of what Trump says about the United States."

    And that's just crazy, because the US is in *exactly the same position* as Iran with respect to their need for imports.

  • Delius||

    No kidding. I think Trump is a complete buffoon, but this "analysis" makes no sense at all.

  • buybuydandavis||

    The last week or so has been full Clown Show here at Reason. Worst I can remember.

  • sharmota4zeb||

    If limiting trade with Iran hurts that country, obviously limiting trade with the United States hurts us, too.

    Well, a spouse having a headache to punish you is like that. But when you are not monogamous, and you have more options than the other guy, this tactic might be effective. Even so, tarrifs suck.

  • ibcnu||

    Seems to me that, despite the moniker of "reason", people are continually blinded by playing into the micro target game. Howw is it that people cannot reason out that the sanctions talked about (steel, aluminum, other metals and elements) have zero to do with what they seem to percieve. Here are some things that seem to be not at all thought of.
    In imposing sanctions of this type, especially now, has zero to do with anyy trade deficit. It does though have everything to do with Wall Street and the financial sector. There is a close relationship between the "defense industry" and pay to play when it comes to money. The current administration has just boosted the DoD budget to an absolutely insane level. The weaponry for the DoD in the budget is for things made from steel, aluminum, other metals and elements. Curious that at the same time these tariffs are enacted, considering that there is no infrastructure left in the US to produce these metals. The DoD has already "lost" trillions of USD that we all know of. Who benefits from these tariffs? Well, naturally those financing the whole thing. The same entities pocketing tax dollars hand over fist already. Can you spell grift of the highest order? Leave your emotions behind.

  • gphx||

    The author starts with the contention he is the judge of what the President can or can't do, basically calls someone who successfully became a billionaire and President an idiot, then goes downhill from there.

  • Jeff Greene||

    I hate tariffs as much as the next guy, and think trade wars are a terrible idea, but in Trump's partial defense, trade sanctions on Iran and North Korea are a bit different than self-imposed sanctions on ourselves, because we at least have the capability of producing everything we need ourselves, albeit at a much higher cost. When we cut countries like Iran and North Korea off, they don't exactly have that option.

    It doesn't make it okay, but it isn't as inconsistent as this article makes it seem.

  • buybuydandavis||

    "The US is exactly like North Korea. Only so much more racist."

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