When it comes to trade, Donald Trump is a protectionist. During his rise, he gained wide support by calling for a smaller trade deficit, meaning he wants the U.S. to export more and import less. But a basic understanding of economics shows that protectionism hurts the average American while only benefiting the heads of domestic industries in the short term.
Talk about trade can often sound dull and abstract. I often feel like the journalists who write about trade have an agreement to use only the most boring and tedious language as if their goal is to make me stop reading. But trade is extremely important and impacts everyone’s life, every minute of every day. And because it’s an issue in which Trump is very active, it is important for all of us to take time and understand just how bad his ideas really are.
Perhaps the best way to understand the damaging effects of protectionism is through an example. Let’s say I want coffee from Colombia, and I find some online for $10. Assuming I value the coffee more than the $10, I will engage in the trade. The Colombian producers will gain $10 and I will gain a bag of coffee, leaving us both better off. However, protectionism adds another factor by separating humanity into two groups: Americans and non-Americans.
By drawing this line, the protectionist has injected an artificial rivalry into the act of trade. Now in the eyes of Trump, when I go to order my Colombian coffee, I am simply sending money out of the country and must be stopped.
The tool that would often be used to stop me from buying Colombian coffee is the tariff. It’s a tax on imports that makes it more expensive for the producers of the Colombian coffee to get it to me, which raises the price I must pay for it. If the tariff works as designed, the Colombian coffee will become too expensive relative to domestic alternatives and I will switch to my next best option, like California grown coffee.
But if we correctly avoid looking at Americans and non-Americans as members of rival teams, it becomes clear that nearly everyone is left worse off by this barrier to trade. In my example, the Colombian producers lose a consumer, I have to settle for a worse product at a higher price and some unseen person is denied resources that are artificially diverted to the California coffee producers. In fact, California coffee producers are the only actual winners here —though I would argue the benefits to this small group are ultimately outweighed by the costs to everyone else.
This is why we see some domestic heads of industry championing the President’s implementation of tariffs. It is artificially increasing the demand for their product. What company wouldn’t want that gift from the government? But these advantages quickly begin to disappear when more tariffs are implemented. In my example, the California coffee producers would be hurt by steel tariffs, making some of their equipment more expensive. Slowly but surely, protectionism forces Americans to work more for less.
Trade between willing people is a necessary ingredient for human flourishing. But we now have a president that wants to use protectionism to solve the problems of the American people. These are real problems that need to be solved, but a simple look at the effects of tariffs makes it clear that it is not the right solution. Protectionism leaves everyone, especially the economically disadvantaged, worse off. It is yet another Trump idea that we must push back on, and push back hard.
Connor O’Keeffe, a Contributing Writer for the Voice, can be reached for comment at COKeeffe19@wooster.edu.