In public policy there are, as the economist Thomas Sowell has said, no solutions, only tradeoffs.
Except, apparently, for tariffs. It turns out that tariffs are magic.
Consider:
- Though tariffs are paid by American importers when foreign goods arrive in the United States, and those higher costs are passed through to consumers, it turns out that other countries are actually paying the tariff. Magic!
- Though tariffs are described as an endless source of federal revenue from imports, tariffs are intended to reduce the number of imports coming into the country. So, somehow, tariffs will reduce imports while maintaining steady federal revenue. Magic!
- Everyone knows that imposing tariffs will result in new retaliatory tariffs imposed by other countries on U.S. exports, and that federal spending will increase in order to provide relief. Yet tariff revenue is a freebie that comes without cost. Magic!
- In a time when inflation and high consumer prices helped turn an election, tariffs will somehow raise the cost of imports without being passed through to consumers, without further raising prices, and without causing political problems for the new administration. Magic!
- An administration that wants to root out corruption and the Deep State can impose tariffs while also entertaining a constant parade of lobbyists and well-connected businesses asking for exceptions from tariffs imposed by that administration. Magic!
Hopefully the sarcasm is obvious. Tariffs are an example of magical THINKING, not magic.
There is a reason why trade liberalization in latter half of the 20th Century raised living standards and helped reduce poverty across the globe. Adam Smith is still right, comparative advantage is still a thing, and consumer benefit should always be prioritized above producer benefit.
Thinking that tariffs will not incur significant tradeoffs and unanticipated consequences is magical thinking, not magic.