President Trump said in a press conference Tuesday that he may postpone the March 1st deadline for the extension of tariffs on Chinese goods as US trade representatives are in China working on a trade agreement.
Trump promoted tariffs in his campaign and has argued that tariffs will help strengthen the US economy and bring back factory jobs to American workers. The first round of tariffs on started last year with a 25% tariff on over 800 different Chinese goods.
Globalization’s Trade-Offs
This current period of globalization has brought with it many benefits including drastic reductions in poverty, yet it comes with trade-offs and we are in the midst of a backlash, or at least a tempering of globalization.
While globalization has created real economic benefits especially in the area of communications and supply chain, not everyone has benefitted equally. Africa has generally been left out, and within each country some benefit more than others. In the US and Europe certain sectors in manufacturing have suffered as jobs moved to foreign countries.
It can be easy to respond to this with an economic analysis that talks about creative destruction. After all this is what happens in a growing, dynamic economy: industries go out of business and get replaced by new industries; structural unemployment causes challenges in some industries, cities and states, but on the whole we are better off and those people will find new jobs in new industries.
Solidarity and Subsidiarity
Much of this is true, but we also have to address the concrete reality of the people who lose their jobs. They are not simply statistics. For some people structural unemployment can be long term, and even generational. This has tremendous negative social and familial consequences. It also raises a question: do we have as a society some responsibility to help the people who “took a hit for the team” and are suffering because of globalization? Do not the principles of solidarity and subsidiarity require that we take an interest in our neighbors, especially those closest to us?
This is part of a larger debate, and even if we do have special responsibility to our countrymen—which I believe we do—the question remains: are tariffs the best tool to help solve the economic and social problems that come from globalization? And if not, what are other policies, economic and otherwise, to help mitigate the negative economic and social impacts of globalization and trade while keeping many of the benefits? Creative destruction can cause social and economic upheaval to be sure. But the lack of it can even be worse. A society with no economic growth and no creative destruction makes people feel stuck and can cause social uprising worse than
Debate: Trump Tariffs Pro and Con
I just came across an interesting debate from The Tom Woods Show— Trump’s Tariffs Pro and Con – Gene Epstein, moderator of Baron’s The Soho Forum, debated Dan McCarthy, editor or Modern Age, and editor at large of the American Conservative.
The debate on the Trump tariffs took place last year, but it is very relevant to the discussion about economics policy, manufacturing, politics, the middle class, national security, and the social and political health of the nation.
Gene Epstein is arguing against tariffs, for more free trade, and for a smaller army. Dan McCarthy is arguing for a more aggressive national economic and industrial policy that protects US workers and strengthens national security. Host Tom Woods questions McCarthy on whether tariffs only help a small group of the “seen” while a larger group of the “unseen” have higher costs—i.e. we save some jobs in one industry but lose them in another and raise prices for millions of consumers.
One thing I liked about this debate is that it brings out the complexity of the issue.
Epstein asked McCarthy, a conservative, how he justifies his view of a limited state with a larger national industrial policy. McCarthy challenged Epstein asking him how he expects to have a small army that just defends and American’s borders and expect to have worldwide free trade if the US is not keeping the oceans and waterways safe with our military power.
Take a listen, and let us know what you think and other arguments that need to be considered.
