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On the fallacy that Americans will eventually win big from the tough bargaining of Tariff Man – Publications – AEI

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AEI On the fallacy that Americans will eventually win big from the tough bargaining of Tariff Man At Cafe Hayek, Don Boudreaux displays some more masterful economic badassery by responding to the common narrative that because China stands to lose more economically than America from a trade war that Tariff Man is right to wage this war, here’s a slice: The fact that in a trade war the absolute amount of damage suffered by foreigners might exceed that suffered by fellow citizens is ethically and economically irrelevant: even from a purely nationalistic stance, no government has any business inflicting harm on the bulk of its citizens in the hope of securing advantages for a handful of its citizens. And further: in what sense would we Americans benefit if the reduction in Chinese living

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On the fallacy that Americans will eventually win big from the tough bargaining of Tariff Man

At Cafe Hayek, Don Boudreaux displays some more masterful economic badassery by responding to the common narrative that because China stands to lose more economically than America from a trade war that Tariff Man is right to wage this war, here’s a slice:

The fact that in a trade war the absolute amount of damage suffered by foreigners might exceed that suffered by fellow citizens is ethically and economically irrelevant: even from a purely nationalistic stance, no government has any business inflicting harm on the bulk of its citizens in the hope of securing advantages for a handful of its citizens. And further: in what sense would we Americans benefit if the reduction in Chinese living standards turns out to be greater than is the reduction in our living standards?

It won’t do to reply that the goal of waging a trade war is to pry open global markets so that fellow citizens will all become more prosperous in the future. Forget that history suggests that this tactic will likely backfire. The actual goal of real-world trade wars isn’t to raise consumers’ living standards by making global trade freer; it is instead to gratify politically powerful producers by expanding their export markets while lessening the competition these producers face at home.

Although economists spin stories of how the gains from prying open foreign markets might exceed the costs of today’s tariffs, no real-world trade war is fought to promote the interests of domestic consumers. All such wars are fought to promote the interests of politically salient domestic producers. That is, trade wars are fought, not to increase all citizens’ opportunities to get more consumption goods, but to increase and protect a subset of existing producers’ opportunities to ship more of their outputs abroad while facing less competition.

On the fallacy that Americans will eventually win big from the tough bargaining of Tariff Man
Mark Perry

Mark Perry
Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

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