It’s amazing that it is still necessary to instruct U.S. presidents on the damage that tariffs do to people. You would think that by the time a person becomes a president of a country, he would be wise enough to know this. Why, even many progressives and conservatives have finally joined up with us libertarians in opposition to tariffs.
The subject arises with President Trump’s unilateral decision to impose tariffs on imported solar panels and washing machines. The targeted countries are China and South Korea (yes, the country that Trump and the U.S. national-security state say that they’re interested in protecting from North Korea).
Trump has two related reasons for imposing the tariffs: one, that those two countries are, he says, engaged in “unfair trade practices” by “dumping” state subsidized products — in this case, solar panels and washing machines — on the United States and, two, protecting American businesses that sell such products and that have experienced financial losses as a result of such “unfair trade practices.”
The first thing to keep in mind is that a tariff is a tax. It’s a sales tax on foreign goods. So, while Trump’s followers are praising him for lowering income taxes (while increasing federal spending), let’s keep in mind that he has just raised federal taxes with his tariff.
Who are the people who will pay Trump’s tariff/tax? American consumers. With his unilateral imposition of tariffs, Trump has now forced American consumers to pay more money to purchase Chinese or South Korean solar panels and washing machines or pay more money than they would have to American sellers of solar panels and washing machines.
Let’s assume that Chinese and South Korean producers of such products are “dumping” their products onto the American market at artificially lower prices. Indeed, let’s go further. Let’s assume that the Chinese and Korean governments are subsidizing the products, which enables their producers to sell them at a lower price. Let’s assume further that American sellers are, in fact, losing market share and even facing financial ruin by such actions.
Does all that legitimate Trump’s imposition of a sales tax (i.e., tariff) on those foreign goods?
No! Absolutely not!
Assume the following: Suppose Toyota was to suddenly announce that it was sending a free Camry as a gift to every single family in the United States.
How many families would refuse the gift? My hunch is: Not very many. Most everyone would be ecstatic about receiving a free Toyota Camry.
What if Ford and General Motors ran to President Trump and complained about this Japanese “dumping” of free Camrys onto the American people. What if they said, “Mr. President, do something. Those gifts of free Toyota Camrys will mean less of our automobiles will be bought. Please protect us from this ‘unfair trade practice.’”
Would that justify the imposition of a Trump tariff on Toyota Camrys? Absolutely not! The American people have the right to receive gifts from whomever they want from anyone in the world. The U.S. government has no legitimate authority to interfere with the giving and receiving of such gifts, not even to protect domestic producers from the consequences of such gifts.
What if Trump were to impose a tariff of, say, $15,000 on Toyota Camrys? Toyota could still give the gift, only it would it mean that American families would have to pay $15,000 for them, which would still be a good deal, but clearly not as good as deal as free. American families would be out $15,000 because of the Trump tariff/tax.
And guess where all that tariff-tax money goes. No, not to GM or Ford. It goes to the federal government! In the name of protecting GM and Ford by denying American families of receiving free gifts of Toyota Camrys, the federal government enriches itself with its tariff/tax.
What about the fact that the Japanese government is subsidizing the free Camrys? That’s something for the Japanese people to figure out and resolve. If they don’t like getting plundered and looted by their own government so that Toyota can benefit Americans, they have to take it upon themselves to stop their own government from doing this. But under no circumstances does wrongdoing by the Japanese government against the Japanese people serve as a moral justification for President Trump to trounce the rights of the American people.
There is no difference in principle with respect to solar panels and washing machines. Regardless of the reason for lower prices of such products from China and South Carolina, American consumers have the right to take advantage of such lower prices if that’s what they wish to do.
Of course, if Americans, for whatever reason, wish to decline the free gift of Camry or boycott Chinese or South Korean solar panels or washing machines, they certainly have the right to do so. But that’s up to them, not to Trump or any other federal official.
Finally, there is another aspect of Trump’s actions that needs to be addressed: that he himself, not Congress, has imposed the tariff. That’s the essence of dictatorship — when the ruler wields the authority to take this type of action. In a representative democracy, it is the legislative branch that enacts the laws and it is the executive branch that carries them out.
In the case of the Trump tariff, Congress has apparently enacted a law that delegates its power to impose tariffs to the president. But that clearly is an unconstitutional (and cowardly) delegation of power. Under the Constitution, no branch of government can legitimately delegate its powers to another branch. Trump’s decree to impose tariffs is no different than the dictatorial decrees being issued by the likes of Russia’s Vladimir Putin, Venezuela’s Vincente Maduro, North Korea’s Kim Jong-Un, Egypt’s Abdel Fattah el-Sisi, and other dictatorial or authoritarian rulers around the world.
A genuinely free society entails total and absolute free trade — i.e., the right of people to buy, sell, give, and receive whatever they want and on whatever terms they want, along with the elimination of dictatorial powers on the part of a nation’s ruler.