Trump's Tariffs Are An Attack on the American Middle Class

Tariffs Can Have Bad Results 

Trump's tariffs may ruin the middle class. He has proposed tariffs - he says - to rebuild our manufacturing base and create thousands of jobs for American workers, but the tariffs are more likely to have just the opposite result. Tariffs can sometimes create jobs, but to do so, they must be very carefully designed and implemented, because the results of tariffs are complex. Jobs may be created in the manufacture of products that complete directly with imports, but at the same time, jobs may be lost in industries that depend on exports because countries affected by the tariffs may retaliate by imposing tariffs on goods that they import from us. Thus, our exports may decline.

In addition, tariffs can create American jobs only in industries where our products can really compete with foreign products. For example, American workers might be benefitted by a tariff on certain kinds of computer chips, but American workers would not be benefitted by a tariff on Mexican mangoes or Colombian flowers because we cannot grow tropical fruits like mangoes, and we cannot grow flowers in winter. So, to create American jobs, tariffs must be very selective. They must focus on products that we can expect to produce on a large scale, and the tariffs must avoid destroying jobs in export sectors of our economy.

Tariffs As A Blunt Instrument Will Harm American Workers

However, Trump’s approach to tariffs is not selective because he wants to use tariffs and the threat of tariffs to bludgeon foreign countries into supporting his policies, as we saw in the last month's dispute with Colombia He threatened to put a tariff on Colombian exports including coffee and flowers. Such a tariff might benefit Brazil or Mexico, who produce those products, but it will do nothing for American workers.

We have also seen Trump's crude approach in his decision to put tariffs on imports from Mexico and Canada to bludgeon them into clamping down on drugs coming to the United States. Mexico and Canada succeeded in getting him to put off for a month the imposition of the tariffs, but if he does ultimately impose them, no one thinks that they will create American jobs. The tariffs will only raise prices for Americans.

Tariffs On Steel And Aluminum Will Harm Middle Class Americans

More recently, Trump ordered a 25% tariff on all imports of steel and aluminum. Presumably, the tariff is intended to create American jobs in steel and aluminum production, and the tariff may well achieve that goal. However, by making steel and aluminum more expensive in the United States, the tariff will hurt industries that buy those products. Such industries include manufacturers of automobiles, airplanes, motorcycles and household appliances. The increase in the cost of steel and aluminum will raise the production costs for those manufacturers, and the result may be a loss of jobs in those industries. Indeed, the number of jobs lost may be greater than the number gained, as a study found in 2018, when Trump imposed tariffs on steel and aluminum. That study found that the number of jobs lost was much greater than the number gained, and the prices of consumer products rose in the United States. 

It gets worse. Trump's proposed tariffs of 25% on all imports from Canada and Mexico mean that the automobile industry would be hit not only by increases in the cost of steel and aluminum but also by increases in the cost of automobile parts from Mexico.  Here is a comment on this subject from the CEO of Ford Motor Company:

There’s no question that tariffs at a 25 percent level from Canada and Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profits wiped out and an adverse effect on the U.S. jobs. ... Let's be real honest: Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we've never seen. ... 

Frankly, it gives free rein to South Korean, Japanese and European companies that are bringing 1.5 million to 2 million vehicles into the U.S. that wouldn't be subject to those Mexican and Canadian tariffs. ... It would be one of the biggest windfalls for those companies ever.

Trump's Tariffs Will Hurt Us All

Trump's tariffs increase the prices of many consumer products will probably not increase the number of jobs in manufacturing in our country. It is true that tariffs may help domestic industries under some circumstances, but the tariffs must be very carefully designed, and we know that Trump is not a careful man. He is infantile and probably senile; he is vindictive and impulsive; he is too impatient to read reports; and he rarely listens to expert advice. We can be confident that any tariffs designed by him will do much more harm than good to the American middle class.

Appeals to “Government Efficiency” Are A Smokescreen For Political Decisions

The Appeal to Government Efficiency Is a Smokescreen

 Pres. Trump likes to present his political program as one of promoting efficiency in government. He and Mr. Musk say that government agencies are inefficient and that we can save money by eliminating waste. This idea seems to be appealing. After all, who can be against efficiency? Who does not support eliminating waste? However, the idea of eliminating waste as it is used by Trump and Musk is always a smokescreen for eliminating programs that they don’t like. In order to see why this is so, we need to delve deeper into the idea of economic efficiency.

What Is Economic Efficiency?

Economic efficiency is the ratio of benefits to costs, or 

efficiency = benefits/costs. 

If the benefits of a program are big and the costs are small, the efficiency will be high, but if the costs are high and the benefits are low, the efficiency will be low.  Suppose for example, that we invest $500 in the stock market and the value of our investment increases to $1000, the efficiency of the investment will be $1000/$500, which will give us an efficiency of 2. We can multiply that by 100 to get an efficiency of 200%.

Measuring Economic Efficiency Requires a Point of View

Measuring efficiency always requires a certain point of view that determines what is considered to be a benefit and what is seen as a cost. For example, the efficiency of a business is usually easy to measure because in a business, the owners define the point of view. The benefit is the profit earned by the business, and the wages earned by the workers are a cost. The owners have an interest in lowering their workers' wages because doing so increases the efficiency of the business, but the owners must allow the workers to earn a certain wage because otherwise, the business would fail, and the owners would lose their profit.  

From the workers’ point of view, however, the wages they earn are the benefit, while the owners’ profit is a cost. The workers' wages are always limited by the owners' need to make a profit. The workers must allow the owners to make a profit because otherwise, the business would fail, and the workers would lose their wages. Thus, even in a business, the idea of efficiency is tied to a point of view.

Efficiency in Government Programs

When we are speaking of the efficiency of a government program, we must always take a point of view that determines what will be considered a benefit and what is seen as a cost. Is better police protection a cost or a benefit? Is affordable childcare a cost or a benefit? Is affordable healthcare a cost or a benefit? There are no simple answers to these questions because in each case, the answer depends on one’s point of view. 

In questions of public policy, the various points of view are political. In fact, elections are often about the choice of the point of view that will frame the discussions of particular policies. The question of what is considered a cost and what is a benefit is always political when we are speaking of government programs. It follows that we cannot begin to measure the efficiency of a government program independently of a political point of view. If efficiency = benefit/cost, we cannot calculate its value until we have decided what is a benefit and what is a cost.

Two Practical Examples: Consumer Protection And Clean Air

To most of us, protecting consumers from fraud is a benefit, but businesses can make a profit by defrauding consumers, and from their point of view protecting consumers is a cost. The Trump administration shares that view. Trump sees protecting consumers as a cost, and therefore, reducing protection for consumers increases the efficiency of our government. That is why the administration has ordered the Consumer Financial Protection Bureau to stop all of its work. Trump and Musk believe that our government should not protect consumers from financial fraud because to do so is wasteful, and elimination of waste increases efficiency. To the Trump administration, protecting us from financial fraud is not a benefit. It is a cost.

Here is another example. To most of us, clean air is a benefit provided by government regulations. From that point of view, eliminating the regulations would reduce the benefit of clean air, and reducing a benefit does not increase efficiency. However, from the point of view of businesses that produce pollutants, the regulations that force the companies to emit fewer pollutants are a cost, not a benefit. The Trump administration shares that view. To Trump, clean air is not a benefit; it is a cost because complying with the regulations costs money. From that point of view, eliminating the regulations will reduce costs and will thereby increase efficiency. 

Don't Be Fooled

In the cases of clean air and consumer protection, the idea of increasing efficiency cannot be separated from the political question of whether clean air or protection from fraud are benefits or costs, and that is true of every government program. Is the medical care provided by Medicaid a benefit or a cost? Is DEI a benefit or a cost? Are agricultural price supports benefits or costs?

The answers to these questions are inherently political. Trump and Musk like to pretend otherwise. They try to persuade us that increasing efficiency is politically neutral. They claim that increasing efficiency can be separated from politics, but that is a lie, and it is a screen for their real goal, which is to eliminate programs that do not increase corporate profits. Anything that does increase profits is seen as a benefit while anything that does not increase corporate profits is described as a cost. Social Security? It's a cost. Cut it! Medicare? It's a cost. Cut it? Air quality regulations? They're a cost. Cut them! Public education? It's a cost. Cut it!  Don’t be fooled. Resist!

Raising Tariffs and Deporting Immigrants: A Case of Incompatible Policies

Incompatible Policies

President Trump has adopted two policies that are incompatible with each other. They cannot both succeed. The first policy is the deportation of undocumented immigrants, and the second is the imposition of tariffs. Let us consider the tariffs first. The purpose of tariffs is to make foreign goods more expensive in the United States in order to encourage companies to produce goods here and thereby to rebuild our manufacturing capacity and create jobs for American workers. 

Economists disagree over the effectiveness of tariffs for this purpose, but even if we assume that they can do what they are intended to do, they will fail to achieve their goal if we deport our immigrants. They will fail because without immigrants, the United States will face a shortage of workers, and no company will build factories here unless it expects to find workers to staff the factories. The United States, like all industrial countries today, has a declining, native-born population of working age. In recent years, our economy has grown faster than the economies of other industrial countries only because our working age population has grown due to immigration.

We Have Always Needed Immigrant Labor

The United States has always been a country with vast natural resources and a shortage of labor. We have been able to leverage our resources to become a rich and powerful country only by importing labor. That has been true since the very beginning of our country. In 1794, the cotton gin was invented. It made large-scale cotton farming in the American South possible, but we did not have the labor to exploit that possibility. So, through the slave trade, we imported hundreds of thousands of Africans to do the work. We do not usually think of the slaves as immigrants, but they were immigrants who were forced to come here, and a huge share of our country's wealth was created by their labor. Cotton accounted for more than half of American exports before the Civil War, and the wealth created by the slave and cotton trades was later invested in industrial development. We should not be proud of the slavery in our past, but we cannot deny its contribution to our country's wealth.

In the late nineteenth century, the United States was poised to become the world’s greatest industrial and commercial power. We had vast natural resources, endless fertile land and a marvelous water transportation network, but we lacked the labor to develop our industrial capacity. So, we recruited foreign workers. Between 1870 and 1900 we took in neatly 12 million immigrants, and that immigration supported a huge growth in our economy.

Immigrants Allow Our Economy To Grow

Today, we still need immigrant workers. We and all of the world’s rich, industrial countries face a shortage of workers due to aging populations. As countries industrialize, families become smaller. Women bear fewer children. Today, in every industrial country including the United States, the number of children born to each woman is less than the number required to maintain the current level of the population. So, every industrial country today has a population which is aging, and that means that there are fewer people of working age.  Except the United States. Our working population continues to grow through immigration, and because of our hospitality to immigrants, our economy can continue to grow. Our economic growth rate is the envy of the world. We outstrip Europe, and we will eventually outstrip China, as well. We can do that only because we have so many immigrants.

Without Immigrants We Cannot Rebuild Our Manufacturing Base

This is where deporting our immigrants comes into conflict with the imposition of tariffs. The point of the tariffs is to rebuild our manufacturing capacity by encouraging companies to build and operate factories here in the United States, but companies will not build factories here if they cannot find workers to staff the factories.  We can rebuild our manufacturing base, or we can deport our immigrants. We cannot do both.

Deporting Our Immigrants Weakens Our Economy And Our Country

This means that anyone who is in favor of rebuilding our manufacturing base must oppose deporting our immigrants. We cannot be a strong, rich industrial country without them. Moreover, deporting our immigrants weakens our national security by making us more dependent on industrial products from abroad. We won the Second World War in part because our factories were able to produce the weapons used by us and by our allies.  Thus, deporting our immigrants will weaken our national security as well as our economy. Deporting our immigrants is un-American as well as foolish.