Following the failed policies of the 1930s, Trump and now Biden are both indicating there will be more restrictions on U.S. imports, especially from China. Policies like these will greatly harm both th e U.S. and the world economies.
- Regardless of any other argument, we saw in the 1930s that when one country starts a trade "war" by raising tariffs, others retaliate. See references to the Smoot-Hawley tariff wars. We also saw this same effect with Trump's trade war with China: The Chinese retaliation against US farmers was extremely costly to the farmers, requiring bailout policies that cost much more than any potential benefits (of which there were few). Trade wars make everyone worse off (except maybe the lobbyists).
- It's REALLY hard to argue that the US needs tariffs to protect jobs when its unemployment rate is so low.
- Quite clearly low-wage countries have an advantage in producing products that require more labour intensity. Their labour is cheap, compared to US labour. And one major reason for that is that US labour is so productive -- When people are productive, they get hired for higher-paying jobs, and that makes it unprofitable to hire them to produce many/most of the goods being produced in China (or India or Bangladesh or....)
- US wages are high possibly because of the minimum wage and unions. But if (I don't think it's serious) and to the extent this is true, it doesn't justify raising trade restrictions to offset those effects. Why don't I think it's serious? the minimum wage in the US is low enough that those jobs are looking for workers; the current minimum wage may be contributing to the general substitution of labour for capital, but because labour has lots of comparatively valuable alternative uses (and because in the US it has lots of capital to work with), wage rates are high.
- Raising tariffs (or otherwise restricting trade) in general hurts poorer people.
- When companies relocated from the rust belt to the southern US, people in the north lost jobs. That's what unemployment insurance is for --- to tide them through the changes brought about by market forces. Tariffs against southern production wouldn't have made most northerners any better off -- they just would have made high-cost, protected, northern manufacturers better off at the expense of northern consumers.
- related-- The same holds for international trade: the protections usually prop up the high-cost and inefficient local producers at the expense of consumers.
- Generally, labour is mobile. People change jobs in response to changes in economic conditions, whether the changes are induced by new technology, new domestic competition, or new foreign competition. These changes, like any changes do indeed cause some people to lose their jobs or suffer in other ways. But those results by themselves should not justify making all consumers worse off.
- But what about unfair trade practices: subsidies, etc.? My brash reaction is that if China wants to tax its population to subsidize exports to North America, hurt me some more. Yes, their subsidized exports to North America distort our prices and affect decisions by entrepreneurs in NA, but these distortions make the residents here better off.
- Trade restrictions encourage, support, and protect less competition among the local firms. It has often been argued (with little success, dammit) that the best competition policy is freer trade. The prevalence and entrepreneurial drive of some foreign suppliers/producers make it difficult for local firms to collude to raise prices.
