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Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
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Trump’s Tariff Destroys Liberty and Prosperity


It is amazing to me that there are still people in the world who believe in economic protectionism. The fact that a president of the United States is among them is astounding.

President Trump has recently announced that he is imposing a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. A tariff is a tax. It means that American purchasers of imported steel and aluminum will now have to pay additional high taxes to the federal government if they choose to continue buying these items. The federal government pockets the money.

Trump’s justification for his tariff decree-law? He says that American purchasers of steel and aluminum are buying these products from foreign producers at a cheaper price. Thus, domestic steel and aluminum producers are losing market share. Trump wants to protect his cronies in the steel and aluminum industry by imposing a tax that will make the foreign steel and aluminum more expensive for Americans buyers, thereby inducing them to buy their steel and aluminum from American producers.

Trump’s reasoning is spurious. If U.S. steel and aluminum producers can’t compete against foreign steel and aluminum producers, that’s their tough luck. No producer is guaranteed success in the marketplace. Businesses open up and offer their goods and services to others. If people choose not to buy them or prefer to buy elsewhere, that is their right. If the business goes under, well, that’s just the way things go sometimes. If a business person doesn’t want to take the risk of failing, then he shouldn’t open the business in the first place.

Domestic producers sometimes say that foreign producers are engaged in “unfair” competition by, say, receiving subsidies from their government, thereby enabling them to charge lower prices to Americans.

Okay, and so what? Every business that opens its doors knows that governments around the world, including the U.S. government, actively assist and support certain businesses with subsidies or other welfare programs. If a business doesn’t want to compete in that type of environment, they it shouldn’t open its doors in the first place. If it does decide to open its doors, it can’t run to the government to protect it from the “unfair” competition of foreigners.

A basic principle of economic liberty is that people have the right to buy and sell whatever they want and to trade with anyone anywhere in the world, without governmental interference. That might well include products that American consumers are getting cheap because of subsidies being provided by foreign producers. People have the right to buy those products just like any other products. They have the right to buy whatever they want from whomever they want.

There is another point to keep in mind: In every trade, the traders benefit. That’s because they both are giving up something they value less for something they value more. Thus, people can increase their standard of living simply through trade.

The corollary to this principle is that to the extent government interferes with the ability of people to freely trade with others, government is lowering their standard of living.

Thus, while Trump might well be helping out domestic steel and aluminum producers with what amounts to a welfare-state dole, he is, at the same time, destroying the economic liberty of the American people and lowering their standard of living.

Keep in mind also that as soon as Trump’s tariffs go into effect, foreign regimes are going to retaliate by imposing tariffs on American goods sold in their countries, such as Kentucky bourbon, Harley Davidson motorcycles, and American agricultural products. Thus, those producers are going to suffer a loss of sales as a result of Trump’s decision to help his cronies in the steel and aluminum industries. Where is the justice in that?

It’s also worth pointing out that Trump is imposing his tariff all on his own. That’s ironic given the repeated pronouncements among federal officials against foreign dictatorship and authoritarianism, like in North Korea and Russia. What could be more dictatorial and authoritarian than a ruler who wields the power to unilaterally impose taxes on the citizenry, especially in an attempt to help out his cronies?

One of the bedrock principles of the United States is the separation of church and state. The principle, which is enshrined in the First Amendment, prohibits the federal government from regulating, controlling, or taxing religious activity.

The libertarian ideal is to extend that principle to economic activity, including trade. Thus, just as we prohibit the federal government from infringing on people’s religious liberty, so we would prohibit the federal government from infringing on people’s economic liberty. A model constitutional amendment would read: “No law shall be enacted respecting the establishment or regulation of trade or abridging the free exercise thereof.”

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.