Tariffs ultimately hurt U.S. public

Now, I can’t vouch for the veracity of that tale, but I like it as an allegory for trade wars anyway. And its portrayal of manly-man-liness seems to conform with the hamfisted confrontationalism of U.S. President Donald Trump and the neo-mercantilists he listens to. They (erroneously) look at global trade as a zero-sum game, where the score is kept by trade balances and imbalances, and they seem to think they can win by shouting loudly and punishing “offenders” (whose supreme offence seems to be selling more stuff to the States than they buy) with punitive tariffs. In fact, all this gamesmanship is, as for Azninski, a way of winning by cutting off your own head. And America — or, more specifically, American consumers and businesses — will be the ones hurt the most over the long run.

For example, let’s start with the turnip-like salvo the administration launched in January: tariffs on imported washing machines and solar panels. The laundry tariff will likely raise the price of washing machines for American consumers by eight to 20 per cent, Goldman Sachs has estimated. Meanwhile, anticipation that it was coming led U.S. importers to stock up on foreign machines, which can be sold at the pre-tariff price for quite a long time, which kind of undermines the point of the tariff in the first place — to protect American manufacturers.

The solar panel tariff could end up even more damaging. Its obvious target is China, the major exporter of solar panels to the U.S. But it turns out Americans spend a lot more time (and occupy a lot more jobs) installing Chinese panels than they do making their own. The U.S. Solar Energy Industries Association predicts the tariff will cost around 50,000 or 60,000 jobs this year. Oh, and electricity prices might rise because of it.

If those relatively contained tariff actions are the turnip-on-head equivalent, the steel and aluminum tariffs Trump recently announced are kind of like cutting off your own foot. George W. Bush introduced similar levies on imported steel back in 2002 (exempting Canada and Mexico, as Trump sort of has). What did it do? Manufacturers had a hard time getting the steel they needed and they paid more for it; there were production delays; they passed along the cost increases to customers. The tariff didn’t save any steel jobs, but it did cost jobs in related industries and put a drag on the entire economy.

Anyway, now we’re getting closer to head-chopping time. According to reports, the Trump administration is thinking of slapping US$60 billion worth of tariffs on Chinese imports — everything from shoes and shirts to TVs and computers — as