Recycled Protectionist Arguments Still Fail
The platform of the Trump campaign has evolved to three issues: surrendering Ukraine, deporting as many immigrants of color as possible, and across-the-board tariffs. The first is rank appeasement. The second is so odious it requires bizarre lies about pet eating.
Tariffs, however, did have respectable defenders at one point. While most economists now recognize their futility and damage, there are some who still cling to the old mercantilist arguments. One of them, Oren Cass, attempted to make those arguments new again in The Atlantic. It didn’t go well.
Cass begins with a theoretical argument that manufacturing is somehow different, and better, than other forms of economic production. This kind of bias is not new. Unfortunately, he seems not to notice that roughly half of our imports are either capital goods or production inputs of some kind (Census/BEA). As such, the average tariff, let alone Trump‘s massive tariff, is just as likely to damage American manufacturing as to “protect“ it.
Cass then moves onto various economic studies in an attempt to claim that the impact on consumers is minimal and thus can be ignored compared to the (mythical) advantage for domestic production. That runs into problems, too. His assertion that the price effect of tariffs on washing machines disappeared soon after their enactment is belied by evidence he chooses to ignore.
Ironically, the very man Cass claims of doing the same to him, Justin Wolfers, is my source.
Cass then adds a twist to the usual import-substituting industrialization argument by claiming that voluntary import quotas on Japanese cars encouraged Japanese investment in the United States. Even if true, this is hardly what the initial proponents of the quota wanted (which was to increase American firms’ production). Moreover, as Scott Lincicome points out, this was in fact very far from true.
Finally, Cass reminds us that tariffs bring the government revenue. He insist that this is an added benefit of tariffs. I’m old enough to remember when self-described conservatives believed that the government was the least useful actor in spending money for the benefit of the economy as a whole. Sadly, that appears to have gone by the wayside in the Trumpified movement.
This is why I took the time to write this post in the first place. The attempt to rehabilitate tariffs is just part of a larger effort to take Trump’s various meanderings and turn them into a coherent ideology. As a result, the self-described party of Reagan is now adopting arguments that Reagan himself would’ve laughed out of the Oval Office.
By contrast, Kamala Harris calls Trump’s proposed tariffs what they are: a tax increase – and a big one. It’s been decades since the Democrats were explicitly less protectionist than the Republicans, but that’s where we are now.
