What Do You Want, America? (Or: The Madness of Tariffs)

Brian Gongol

The Federal government, in our name, is imposing new import taxes -- tariffs -- on steel and aluminum, not just from China, but from the EU, Canada, and Mexico.

Let's ask: What do you really want, America?

1. You want infrastructure? Then don't make building that infrastructure more expensive to do. Tariffs do that. Whether you force everyone to "Buy American" by law or just raise the price of foreign imports to achieve some of the same effect, tariffs make costs go up. It's madness to increase the cost of the raw goods needed to put pipes in the ground, replace old bridges, and rebuild locks and dams -- especially at a time when there is widespread acknowledgment of the need to improve our infrastructure, from sea to shining sea.

2. You want more manufacturing jobs? Then fight against tariffs. Tariffs on raw and intermediate goods (like steel and aluminum) make them arbitrarily more expensive for advanced manufacturers. The manufactured goods with the highest profit margins are mostly at the high end of the sophistication scale. The more complex the product, the higher the ultimate value -- but also the larger the roster of component parts that go into building it. The world's supply chains are complex and involve a lot of flows across borders. That's a good thing -- especially if it means everyone specializes in the things they do best. American manufacturing, among other things, specializes in building complex things like airplanes and tractors, often for export.

3. You want to deploy the military all over the world less often? Then fight against tariffs and other efforts to cut up the world's trading system.Trade is the ultimate Great Wall against war: Countries with trading relationships rarely go to war.

4. You want to cut taxes? Then don't impose new ones! Tariffs are import taxes, plain and simple. And remember that cutting the check isn't the same as paying the price: The real price of a tax is always shared between the buyer and the seller, in proportion to how much they want the exchange to take place or how free they are to walk away (in econo-speak, their "elasticity"). One party may "cut the check" to the government to pay the tax, but the cost is implicitly split between the two.

5. You want to honor our veterans? Then stand for the hard-won system of rules and agreements that have formed the post-war world order. Mechanisms like the World Trade Organization aren't perfect (they're made up of people, after all), but they have done more to preserve American leadership over a largely stable and peaceful world since WWII than almost anything else. Rebuilding Germany and Japan after WWII -- and then trading with them -- was a brilliant strategy for ensuring the post-war peace.

Tariffs are generally a bad idea, and these are particularly bad ones. They're aggressive against our allies, invite retaliation, and diminish the world order that previous generations of Americans worked hard to build.