Our “First Principles Series” is a new awareness effort by Beacon to restore our nation’s commitment to individual liberty based on the principles of free markets, private property, and limited government that have made America the best nation in the history of the world. Often, politicians eager to appease constituents can stray from these principles. And voters can be misled into believing that policies violating these principles are in their best interest when they’re not. This series is designed to set the record straight and make the case for standing up for our most important principles, even when it might be politically expedient to ignore them. Today’s posts are the first of many in this series.
We’re at a curious time in American politics. Swept back into office on the promise of restoring our economy for the middle-class, President Trump has now staked his presidency on raising taxes on the very people who put him back in the White House. Of course, he doesn’t call it that. He calls them tariffs. And he just imposed—albeit some have since been temporarily paused—massive ones on about 90 countries across the world.
Simply put, tariffs are taxes on imports from other countries. Proponents of tariffs claim that they will level the playing field with competing countries and encourage more production of goods here at home.
Proponents of tariffs are wrong.
A country can’t tax itself into prosperity. The more you tax citizens, the less well-off they are. While Republicans have historically been the party of lower taxes, they have convinced themselves that tariffs are a tax on foreign countries and their citizens. But study upon study shows that tariff taxes are ultimately borne by those buying the goods, in this case, American consumers.
Another argument tariff advocates advance is that, to avoid the higher costs of imported goods, we will all just shift to purchasing American-made products. There is certainly nothing wrong with quality American-made goods. But this is a weak argument for a couple of reasons.
First, it’s a sheer fact that other countries, for a variety of reasons, can produce certain products and ship them to us for cheaper than we could produce them ourselves. Even if we begin making our own products domestically, it will inevitably cost us more to do so. Whether we pay tariffs on imported products or change our behaviors to make and purchase American products, we wind up paying more either way.
Another reason this argument fails is the natural evolution of an economy. Some countries are currently having their Industrial Revolution. I’m glad we had ours centuries ago and have moved on to brighter days. We are now a service economy. Ask yourself this: would you prefer your child learn coding or how to make Nike shoes? I say mamas don’t let your babies grow up to be cobblers.
In a developed economy, we can create wealth for our citizens by offering services sold out of comfortable offices while purchasing goods made in plants from other countries. As a result, we get richer, work fewer hours, and have less dangerous jobs. It was free trade, not tired old tariff policies, that made us the strongest country in the world. Let’s keep it that way.
Whether tariffs are good or bad policy is just one part of the debate. Read about the other side of the coin in The Legal Case Against Tariffs.