Back in early 2017 I warned about President Donald Trump’s support for tariffs. I pointed out how they are a bad idea that makes us worse off.
Tariffs are a bad idea economists have been warning us about for centuries. It was a founding insight to the entire discipline of economics. Yes, the idea goes all the way back to Adam Smith, who wrote in his Wealth of Nations (1776):
It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. … If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.
Centuries later, the insight that “Tariffs and import quotas usually reduce general economic welfare” is one of the public policy issues with greatest agreement among economists.
Today the Foundation for Economic Education carries an article by titled “Economics Was Invented to Refute Trump’s Tariff Arguments.” Here’s a snippet:
When Adam Smith wrote Wealth of Nations, it wasn’t to refute the “godless socialists” 21st-century Republican voters believe are taking over the world. It was to refute the kinds of protectionist ideas championed by conservatives like Edmund Burke and Alexander Hamilton in Smith’s day, Abraham Lincoln eighty years later, and Trump today.
Bastiat remade Smith’s case in 1848. Henry Hazlitt did so again in 1946. Still, these economic fallacies persist because they offer the victims of other bad economic policies villains they can blame for largely self-inflicted wounds.
The lower prices Americans pay for automobiles, clothing, Apple iPhones, and Bobcats allow them to patronize those American industries which operate more efficiently than their overseas competitors. That’s called “comparative advantage,” something else free market advocates since Adam Smith have been educating people about.