Jun
15
Can Trump’s Tariff Diplomacy Actually Work?
In past writings and conversations, I have been candid about my dislike for tariffs in general, quoting sources like Thomas Sowell and the Cato Institute. With President Trump’s use of tariffs in economic policy, we see a mix of support and complaint from Republicans and conservatives these days. One voice I have found worth listening to is E.J. Antoni, the Richard Aster Fellow at the Grover M. Hermann Center for the Federal Budget and recently-named Chief Economist for The Heritage Foundation.
A few weeks ago, Antoni contributed an article for Fox News (and now reproduced by The Heritage Foundation) on the question of Trump’s strategy possibly working out in the end. The article isn’t super-long, but if you want a shorter, TL/DR version, I have provided the following:
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President Donald Trump’s tariff diplomacy has been a shock treatment to the global economic order, intended as a kind of radiation and chemotherapy to kill the cancer that created the Rust Belt. But overdoing the treatment can kill the patient instead, without removing the carcinogens in the economy.
The chaos that ensued after April 2 extended around the globe and has forced many nations to the negotiating table with the U.S. — and that includes countries that engage in unfair trade practices. In that sense, the tariffs have been successful. President Trump has also used the threat of tariffs very effectively to help secure America’s southern border and stem the flow of fentanyl, which had become the number-one killer of young people.
But the drama around tariffs has had side effects, like chemotherapy killing off healthy cells in the body. That is not a broad condemnation of tariffs, just as the side effects of chemotherapy and radiation are not a denunciation of cancer treatments. But it does illustrate why heavy-duty therapies like radiation must be used in a targeted manner. The inaccurate “reciprocal” tariff rates released on April 2 caused significant — and unnecessary — damage domestically.
the Trump administration would do well to reevaluate its tariff strategy, ensuring, for example, that its reciprocal tariff rates are in fact truly reciprocal. America must also seriously evaluate what turned the Industrial Belt into the Rust Belt… terrible regulatory and tax policies. Most of our economic wounds are self-inflicted.
At best, fixing international trade problems will give a temporary boost to domestic manufacturing, but the cancer will keep growing. President Trump’s tariff diplomacy is working to create a level playing field and open foreign consumer markets to domestic producers, but America needs to look within to reshore manufacturing and rebuild the industrial base. Just throwing tariffs at the problem is like undergoing chemotherapy and radiation without any lifestyle changes.
Tariff diplomacy can go a long way, provided it is targeted and tailored, but we still need a tax-cut bill and more deregulation if we want to heal the patient.
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As usual, I urge readers to read the full article. IMHO, Antoni makes a lot of sense, and his analogy of radiation and chemotherapy helps get his point across.
