President Trump’s decision to impose tariffs on imported solar panels and washing machines is the first significant consequence of the rise of protectionism in Washington. The successful petitioners from each industry, including American-based SolarWorld AG and Whirlpool, were obviously responding to the current tariff-friendly climate. There is no way to know which industry this might hit next. So if free-trade advocates hope to prevent recent protectionist policies from becoming the norm, they must become more effective in changing the political culture of the country with regard to trade.
Partially due to the rise of populists like Trump and Senator Bernie Sanders, advocating for protectionism has become synonymous with defending the everyman. Advocates for free trade, on the other hand, have become associated with corporate elites. Supported by a (rare) consensus among economists, free-traders sometimes seem to be standing by bemused while Americans gravitate past them towards protectionism. Often as not, they appear unable or unwilling to engage with the moral charges against trade, since their own arguments are largely economic. This unwillingness serves only to cast free traders as wonkishly indifferent to the plight of Americans in post-industrial regions.
Moral arguments are powerful, and tales of “carnage” caused by trade deals evoke a visceral reaction. Yet there is a moral argument to be made for free trade as well, and it is time that trade advocates make it more confidently.
The most important moral argument against protectionism is that tariffs and trade barriers reduce the economic freedom of consumers. Every time trade is restricted, the choices that Americans have when purchasing everyday goods are reduced. A tariff doesn’t just tax a foreign business importing a good; it taxes you for wanting to purchase a cheaper or better option that was made outside the United States. With so many Americans struggling to make ends meet, is it moral to demand that they pay more for needed items just to protect an industry against competition?
The same goes for businesses. Tariffs force companies small and large in industries that rely on inputs that are subjected to tariffs to spend more to create final products. This matters for more than just a business’s bottom line: reduced profits can lead to layoffs, or worse, businesses going bankrupt. How is it moral to protect some businesses or workers over others?
This ties into another problem with protectionism: tariffs often protect businesses that are well-connected over those that aren’t. Take, for example, the case of Boeing using its friendly relationship with the Department of Commerce to penalize an industry competitor. Boeing, a heavily subsidized corporation, managed to get the government to slap tariffs on a rival’s series of jets despite the fact that Boeing does not manufacture any competing jets in that series. Would a less politically favored business have been successful with such a specious claim? Probably not.
Is freer trade going to help the steelworker who lost his job? Not directly. But tariffs probably wouldn’t benefit him either. Employment in the U.S. steel industry declined by about 75 percent between 1962 and 2005, but steel shipments over this same period were highest in 2005. Increased efficiency in the industry made each worker more productive, making fewer steelworkers necessary. This pattern is visible across many similar industries—a 2015 Ball State study found that 88 percent of manufacturing job losses in recent years were attributable to productivity improvements, not trade. The implications are clear: tariffs won’t help turn back the clock.
Nor should we turn back the clock even if we could: employment in industries that rely on steel to create their final products is 46 times greater than employment in the steel industry itself. Causing a price hike on steel would harm more than it would help. Besides, it is certainly not the role of the Department of Commerce to decide who has a job and who does not.
Not that we should abandon post-industrial America as a casualty of the free market either. Encouraging a healthy economy through pro-growth tax reform, removing arbitrary licensing barriers to employment, and cutting back on job-killing regulations are all effective ways to revitalize stagnant regions.
Tariffs, however, are not the solution. They are effectively taxes on American businesses or consumers that attempt to buy cheaper or better foreign-made goods, and are often a mechanism for corporate cronyism. Free trade is about more than just abstract economic theory; it is about not letting the government tell you what you have the right to buy for a reasonable price. Now it’s time for its advocates to stand up and point that out.
Andrew Wilford is a Young Voices Advocate based in Maryland. He also contributes regularly on issues of corporate cronyism and tax policy to the American Spectator, RealClearPolicy, and The Hill, among others. Follow him on Twitter @PolicyWilford.