Here’s why we (still) don’t like the tariffs
The Rio Grande Foundation philosophically supports low taxes and free trade. We don’t weigh in on every issue of importance in Washington, DC, but rather focus on federal issues only when they are of extreme importance. We believe that the issue of the Trump tariffs fits that bill. We oppose them strongly and for several reasons:
- Tariffs are taxes: We don’t support raising taxes as a general rule, this time is no different. Like all taxes tariffs have negative impacts on economic activity and prosperity;
- The process: We believe that Congress should make the final decision on taxes and tariffs. This is obviously true for process concerns (one person shouldn’t have such control over economic policymaking) and by putting Congress in charge the process of making tariff policy slows down and allows outside influence to weigh in. Finally, slowing the process down enables businesses to prepare for the policy;
- Unclear goals: What is the Trump Administration’s goal here? Are they trying to bring manufacturing back to the US (with a sustained tariff)? Are they trying to get to zero tariffs? Are we now trying a bold move to isolate China (if so, why start by placing tariffs on other nations and why leave 10% tariffs in place now?) Having a specific, achievable goal should drive trade policies. If isolating China is now the goal have we prepared for how they might react?
- Credibility and Alliances: The US stock market is not pre-ordained to be the dominant stock market on the planet. That has happened due to America’s economic strength and credibility of the markets themselves. Allowing rules to be changed suddenly and for dubious reasons can undermine our market hegemony. Also, nations that have previously been our closest allies may take a more cautious and negative approach when dealing with the United States.