On trade and tariffs, Donald Trump is right, and Mark Levin is wrong
Even brilliant people are occasionally wrong, which explains why conservative thinker Mark Levin is confused about the effect of tariffs. Levin has spent many shows, such as the one on Friday, excoriating the Trump administration's policies of imposing tariffs on imported goods.
Most of what Levin says is technically accurate, yet, at the same time, he is totally wrong about Trump's trade policies. How can both be true?
Let's look at what Mark has said:
1. That tariffs hurt American customers. True. As Levin correctly points out, tariffs are a tax on the American consumer. If we impose a tariff on Canadian imported steel, that tariff is paid by Americans who buy products made of steel, not Canadians.
2. That tariffs hurt American businesses. True. The steel tariffs, for example, affect every business that uses steel. That means they raise the price of doing business for car-makers, appliance-makers, and the manufacturers of thousands of other products. Higher prices for businesses mean fewer sales, and fewer sales mean less in profits and less success for American businesses.
3. That tariffs are an infringement on liberty. True. Levin brilliantly makes the connection between tariffs and liberty. Tariffs are a tax on the American people, and tax is a form of property confiscation. The higher the tax, the higher the confiscation, and the more liberty we lose.
4. That tariffs protect the steel industry, which needs no protection. True. Levin frequently, and accurately, points out that domestic steel-makers have a commanding 70% of the American steel market and are not in danger of extinction. Levin notes that the minute the tariffs were put into place, American steel-makers raised their prices to just below the levels of the new tariffs, giving them windfall profits based not on market forces, but on crony capitalism.
Yet Levin is wrong about the imposition of tariffs.
As a permanent policy, the imposition of tariffs is protectionist and among the worst forms of crony capitalism, favoring some industries at the expense of others, as well as at the expense of consumers. They are an unconscionable tax on the American consumer.
But as a temporary negotiating tactic, tariffs are painful but necessary. How else are we going to persuade our trading partners to open their markets if we don't impose tariffs? We negotiated NAFTA, but years later, if you want to export a quart of milk to Canada, you have to pay a 270% tariff. Obviously, NAFTA opened some markets but left many others closed. The results of negotiated deals like these are to set into place uneven playing fields where our trading partners have more access to American markets than we have to theirs, thus most of our major trading partners have trade surpluses with us while we have trade deficits with them.
Our trading partners are perfectly happy with this arrangement and see no need to open up their markets further. That's why Trump had to impose tariffs on their imports to the U.S. if he wanted to get their attention.
In the short term, there will be pain and business losses and higher prices to consumers, but in the long term, it will be a great victory for American consumers and businesses. That's because our trading partners can never win a trade war and will be forced to concede. They can put counter-tariffs on our goods, but since they export more to us than they import, they have much more exposure. China can put tariffs on $130 billion's worth of imported goods, but we can respond with tariffs on over $500 billion worth's of Chinese exports. Who do you think will win such a trade war, and quickly?
Of course, our trading partners would never open their markets further unless we eliminated these new tariffs. So they are a temporary negotiating tactic, not a permanent measure to protect American industry, as I understand Trump's intent.
For some reason, Levin doesn't distinguish between temporary tariffs and permanent ones. He won't acknowledge the benefits to American businesses and employment of opening foreign markets. Can you imagine the shot in the arm to American farmers if they are suddenly able to sell dairy in Canada without 270% tariffs? Can you imagine how many jobs would be created?
Meanwhile, Levin appeared to agree with a caller on Friday who said it is perfectly fine to let foreigners take our dollars in return for their goods. But what do they use our dollars for? They buy up our real estate and companies. This is not "new" money being injected into the American economy, but existing funding leaving America and returning in the form of foreign ownership of American capital.
As I listen to Mark Levin every day, I would love to hear a discussion of the merits of tariffs as a temporary negotiating tactic with partners with whom we have substantial trade deficits. But in all his frequent discussions of the subject, he treat tariffs like permanent protectionist measures.
Ed Straker is the senior writer at Newsmachete.com.