The United States’ current predicament with China presents an ethical quagmire. Few would deny that China poses a national security threat worthy of a strategic response.

The Trump Administration has proposed a bevy of economic policies designed to bolster sectors of the U.S. economy. Many of these rely on tariffs, subsidies, and government buy-ins to private industry. Such measures might strengthen select sectors in the short term, but it is worth asking, at what cost?

Political momentum surrounding efforts to counter China leans heavily on these approaches. Advocates of tariffs often concede their economic distortions and increased costs to consumers but defend them as a necessary trade-off in pursuit of “America First.” Yet beneath the economic debate lies a deeper moral question about the role of government in the market and its impact on our personal liberties. Tariffs, subsidies, price floors, and buy-ins are all forms of centralized planning. These policies take money from taxpayers and redistribute it for the benefit of a politically favored sector. Free markets do not function this way; state-driven economics sacrifices individual choice and property rights in the name of strategy.

However, even staunch advocates of laissez-faire economics, such as Milton Friedman, acknowledged that certain freedoms may occasionally be curtailed in the name of defense. Defense trumps wealth. But that logic can be inherently dangerous; it invites abuse. Recent history offers an example, during the global pandemic, millions were forced out of work, stimulus payments fueled inflation, and some businesses were elevated over others, all under the banner of crisis response. What constitutes a “threat,” and who decides?

Before resorting to methods rooted in state-run enterprise, policymakers should look to Reagan’s containment strategy against Russia during the Cold War. Economic actions under containment were not entirely “free market,” but they were targeted and disciplined. Reagan’s administration imposed export restrictions and grain embargoes while simultaneously pursuing domestic deregulation and tax cuts to expand U.S. markets. All of this sprinkled with abundant military spending.

If tariffs and price floors are to be used as a strategic measure against China, two principles should be considered in their implementation:

1. Make them temporary. While temporary tariffs and price floors remain in effect, policymakers should pursue aggressive deregulation and to encourage private investment in mining and refining. The current rare earth predicament in the U.S. is, in many ways self-inflicted, the result of allowing environmental zealots to overregulate domestic mining and refining capacity. Some estimates show that it takes, on average, seven to ten years to obtain federal permits necessary to open a mine in the U.S., compared to two to three years in Canada and one to two years in Australia. In addition, permitting delays alone can add nearly $1 billion to the cost of a mining project. Deregulation will have the most lasting impact by expanding domestic production and competition. The administration should focus on treating the disease, not the symptoms, if it hopes to achieve lasting reform.
2. Drop the tariff shenanigans with our allies. A looming threat like China makes tariffs against allies seem all the more frivolous. Tariffs will cost us, maybe not as catastrophically as doomsayers predict, but they will burden consumers and decrease jobs in other industries, as they always do. The smarter path is to build an international coalition, much like Reagan did against Russia, to counter China’s influence. Risking trade wars and petty squabbles over tariffs, rather than expanding open markets, only weakens that strategy. Many nations, such as Australia, India, Greenland, Canada, Brazil, and others, possess rare earth resources and are developing their own refining capacities. Mexico, too, can serve as a valuable partner in semiconductor production. These countries are not national security threats; they share our strategic interests.

The administration’s proposals may carry unavoidable costs, but the costs will be more substantial if policies are not honed and specific.

Ironically, the argument that America no longer operates in a truly free market is often invoked to justify policies that make it even less so. History suggests otherwise, America rose to economic and military superiority not through state-directed industry, but through freedom itself.

Matthew Williams is a compliance and technical investigator for pharma and enjoys freelancing once in a while. Follow him on X @Back2TheCenter.

Image: AT via Magic Studio