Freedom and Tariffs
Freedom and Tariffs
Tariffs raise prices on imported goods, as importers pass on costs to consumers. This decreases demand, by the basic laws of economics. It may reduce it to zero. This means that consumers don’t buy what they would have bought if it were not for tariffs. They would prefer to buy what they no longer buy, but the prices have become prohibitive. For example, they would prefer to buy a foreign car, but they can no longer afford one, so they buy a cheaper domestic car—they buy a Ford not a Ferrari, say. They would much rather have the foreign car, but they settle for the homegrown car. They are accordingly less happy than they would have been without tariffs. They are not getting what they want. The same goes for food, clothes, etc. Tariffs reduce quality of life for consumers. They also entail that money doesn’t flow into the country that produces the goods in question, thus reducing its purchasing power. That means that the producing country has less to spend on foreign goods, which reduces demand for them. Thus, supply will drop in that country, because demand has dropped. This will lower the prosperity of the producing country, reducing the quality of life of its inhabitants—they will have less than they want. Tariffs impose reductions in the standard of living of the people imposing the tariffs (as well as those living in the tariffed country). This much is fairly self-evident economic reality: tariffs don’t add to human happiness. But there is also a political dimension to this, not often remarked upon: tariffs reduce freedom. They make a society less free, by curtailing economic choice. You would choose a foreign car if you could, but you can’t because of tariff-induced price rises; so you settle for what you would prefer not to have. You settle for a clunker when you could have had a racer. The situation is uncomfortably similar to communist systems of production and consumption: state-produced goods that you are forced to purchase instead of high-quality goods from abroad. Consumers have had their economic freedom curtailed: they can’t buy what they want in a free market, but are forced to buy what they don’t want. Tariffs are inherently anti-freedom. Free markets are markets in which people are free; tariffed markets are not free. If manufacturing at home is inferior to manufacturing abroad, people end up less well off than they would be under free market conditions. They are living under economic tyranny, in effect. If you value freedom politically, you should be against tariffs (except under special conditions). At best they are a necessary evil, but they are clearly an evil from a libertarian point of view. They do not promote liberty. They are not a form of liberation but of constraint. They are a type of economic incarceration or prohibition.
At his Substack, Paul Krugman writes, “Basically, [Trump’s] claiming that the rest of the world is placing very high tariffs on U.S. products, and that he’s imposing ‘reciprocal’ tariffs that are only half what they impose on us. Here’s the chart he showed: … The EU, like the United States, has generally low tariffs; the average tariff it charges on US goods is less than 3 percent. So where does this 39 percent number [on Trump’s chart] come from? I have no idea.” https://paulkrugman.substack.com/
Trump arithmetic.
To give credit where it is due, one of Trump’s tariffs is unlikely to cause economic harm. It is the 10% tariff he placed on two uninhabited Antarctic islands. https://www.salon.com/2025/04/02/trade-with-penguins-places-10-tariff-on-uninhabited-antarctic-islands/?in_brief=true
Those islands have been very unfair to us for many years.
I was mistaken. Those islands are not uninhabited. Seals and penguins live there. (Heather Cox Richardson mentions it this morning.) As an animal rights advocate, I should not overlook nonhuman animals.
Well, what do you expect from seals and penguins? They have been ripping us off for years! We need to impose stiff tariffs on them, or maybe deport them.
The business about the fake formula for calculating “reciprocal” tariffs was hilariously stupid, but sums up the entire strategy of this “administration”.
Although I have previously declared a disinterest in ethics, I would be quite curious to read your take on the ethics of tariffs (regardless of the orange, fascist, dipshit’s motives)
Is protectionism unethical considering that America has benefitted from past exploitation of other countries via slavery and Britain’s empire building or is it more unethical to benefit from cheap labour abroad at the expense of America’s working class?
That’s a very complicated question about which I have nothing original to say. One question is whose utility should we be maximizing: people generally, people only from our own country, future people. Ideally, there should be no tariffs at all but complete free trade.