“All [Donald Trump] did was impose tariffs, which raise the prices for every American,” former New Jersey governor Chris Christie pointed out in the December 6 GOP primary debate. “You can’t say he was good on trade because he didn’t trade. He didn’t change one Chinese policy in the process. He failed on it.”
Christie’s correct that tariffs make the American consumers who pay them poorer, and that Trump’s “trade war” with China hasn’t resulted in “victory” when it comes to policy changes on that government’s part.
But does that make Trump’s tariff obsession a “failure?”
Success and failure are measured in terms of accomplishing, or not accomplishing, particular objectives.
If we assume that Trump’s actual aim was to increase the ratio of American exports to Chinese imports, then yes, he failed. Miserably. The US “trade deficit” with China has increased, not decreased, since Trump’s inauguration.
That’s actually kind of good news. The term “trade deficit” sounds bad, but what it actually means is that (in aggregate) we’re giving up less and less of our stuff in return for more and more of their stuff.
The bad news is that we’re paying more and more for … well, everything. That’s not ENTIRELY due to trade policy, but it is to some extent. And instead of assuming that tariffs are intended to address “trade deficits,” it’s worth looking at who benefits from those tariffs versus who suffers.
Christie took notice of one suffering demographic: American consumers. Tariffs jack up our prices.
Chinese workers also suffer if there aren’t as many jobs making as much stuff (whether for domestic consumption or export).
The beneficiaries of US tariffs on Chinese goods are American businesses who compete with Chinese businesses to make stuff and sell that stuff to us.
Simplified version (there are factors other than the ones I’m noticing here):
Suppose you can buy a Chinese-made widget for $1.00, but an American-made widget costs $1.25. You’re more likely to buy the Chinese widget.
But if the US government puts a 30-cent tariff on Chinese widgets, the American company can increase its price to $1.29 and still sell its version to you more cheaply than the Chinese version.
Sure, you pay 29 cents more (or four cents more, if you preferred American-made widgets for some reason other than price point) for the same widget that used to cost you $1.00/$1.25 — but hey, that American company’s owners make out like bandits, even after they pay lobbyists to talk politicians into imposing the tariff.
The real question is whether politicians like Trump are screwing you because they really believe their pro-tariff nonsense, or whether they’re just screwing you on behalf of their Big Business contributors.
That question pretty much answers itself.
Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.