Guest Editorial: Tariffs are no more than wishful thinking
Trade wars and tariffs aren’t the key to prosperity or protecting American workers.
Throughout his presidential campaign, and even long before he ever announced his presidential ambitions, Donald Trump has lambasted international trade agreements as being unfair to the United States and to American workers.
But freer trade between nations is not the sort of zero-sum game that Trump seems to believe it is. While it is true that globalization and freer trade between nations have contributed to the decline of some industries in the United States, it’s also true that freer trade lowers costs for a wide variety of goods and services, spurs job creation in higher-quality sectors and thereby stimulates economic growth around the world.
Though critics of freer trade like to blame international agreements such as NAFTA for the decline in manufacturing jobs here, their concerns are fundamentally displaced. According to research from the Center for Business and Economic Research at Ball State University, 85 percent of manufacturing job losses from 2000 to 2010 were due to technological changes and innovation. Just 13 percent of the 5.6 million job losses in that time period were attributed to international trade.
Given this, and even assuming that tariffs are a justifiable response to job losses, the idea that imposing tariffs will save any significant portion of American jobs is at best wishful thinking, at worst self-destructive economic policy.
We already know that tariffs on particular products, contrary to all the pretenses that they preserve American jobs, actually do more harm overall to the American economy than good.
Trump’s recent steel tariffs follow in the footsteps of similar tariffs imposed by the Bush administration that were later found to have contributed to the loss of 200,000 jobs. With this in mind, it was unsurprising to read researchers at the Federal Reserve Bank of New York warn Thursday morning that “the new tariffs are likely to lead to a net loss in U.S. employment, at least in the short to medium run.”
The reason is simple: Higher prices on imported steel and aluminum also allow domestic steel and aluminum producers to raise their prices. Either way, industries reliant on steel and aluminum will have to deal with higher prices, which in turn could make them less competitive. Since there are more steel-reliant jobs than direct steel jobs, tariffs just lead to a spiral that ultimately leads to job losses and undermines the economy for the sake of
Beyond undermining the American economy, the problems of tariffs just get magnified if and when other countries retaliate with tariffs of their own. For instance, according to the Brookings Institution, California could be hit significantly harder by proposed Chinese tariffs.
Proposed tariffs on 128 products such as wine, plastics, electric cars, nuts and fruit threaten at least 40 industries in our country, which employ over 2 million Americans, 20 percent of whom are in California and Washington state. In Los Angeles County, upward of 40,000 workers are employed in industries which could be impacted by Chinese tariffs.
While we don’t imagine the president particularly has California’s best interests at heart, someone should let him know that trade wars and tariffs can do considerable harm to all Americans’ economy and hurt more workers than they’d help.
Orange County Register, April 19