The Threat of Tariffs

From: B
Sent: Wed 6/29/2016 4:49 AM
To: wblock@loyno.edu
Subject: Trump Trade Question

Dear esteemed professor Block.

I have a question that I hoped you could help answer. I have noticed that Libertarians seem to oppose Trump’s position on trade with China and have lambasted it as protectionist. On this issue I would argue that they are getting it wrong. Specifically I’m talking about his threats of tariffs if they will not allow their dollar to float. The case being made is that Tariffs are bad and that he shouldn’t be using threats against China in the first place as it’s not our business to tell them what to do. I dismiss the “threats” part because it’s not actually a threat in the libertarian sense. Nobody is forcing them to trade with us in the first place. So it’s still their choice no matter what the tariffs are set at. No it’s not a politicians business to tell other countries what to do, but then again he isn’t forcing them to do anything. And it’s no more his business to tell them what to do than it would be for him to tell us what to do. So then we are left with “Tariffs bad”.  OK they are bad. But is it worth using some leverage to get them to float their dollar? Wouldn’t it be better for them and us if they were to allow their dollar to trade freely? His goal isn’t to actually impose tariffs it’s to get them to float their dollar which would be better for all of us. Would you please help me make some sense of this muddle. As it stands I don’t see anything un-libertarian. It’s not an actual violation of NAP. So isn’t it then simply an economic issue where he would actually bring about a positive change if he can pull it off?

Best Regards,  B

Dear B: In my view, Trump is indeed “threatening” two sets of people: Chinese and Americans who want to trade with each other. I don’t think it is relevant that “Nobody is forcing them (the Chinese) to trade with us in the first place.” Right now, no one is forcing you and I to trade with each other. But, suppose that someone said he would make it against the law for us to do so, or would tax (tariff) us if we did so. I think that would constitute a threat as libertarians understand that word. I don’t think that floating exchange rates are such a great idea, nor is it any of our business to tell the Chinese what to do with their dollar. There’s a “fixed” exchange rate between nickels and dimes, right? One to two. Nothing wrong with that. Instead, I favor a gold standard, where the different national currencies merely represent different amounts of gold.

Here are some readings you might peruse:

Anderson, 1999; Barron, 2017; Bastiat, 1848A, 1848B; Block, 1976, ch. 23, 2013, ch. 2;  Block, Horton and Walker, 1998; Boudreaux, 2010, 2016A, 2016B, 2017; Brandly, 2002; Brown, 1987; DiLorenzo, 2018; Ebeling, 2018; Epstein, 2016; Folsum, 1996; Friedman and Friedman, 1997; Gwartney, et. al, 1976; Hazlitt, 1946, ch. 11; Higgs, 2019; Johnsson, 2004; Krasnozhon, Simpson and Block, 2015; Landsburg, 2008; McGee, 1994A, 1994B; McMaken, 2016; Mises, 1927;  Mullen, 2015; Murphy, 2004; Ricardo, 1821; Roberts, 2016; Rothbard, 2005; Rouanet, 2016; Smith, 1776; Vance, 2016; Wenzel, 2018A, 2018B; Williams, 2017A, 2017B

Anderson, William L. 1999. “Tariffs Are Sanctions.” December 17;

https://mises.org/library/tariffs-are-sanctions

Barron, Patrick. 2017. Two Common Objections to Unilateral Free Trade.” April 6; https://mises.org/blog/two-common-objections-unilateral-free-trade

Bastiat, Frederic. 1848A. “The Balance of Trade.” https://mises.org/library/balance-trade

Bastiat, Frederic. 1848B [2018]. “Must Free Trade Be Reciprocal?” March 14;

https://mises.org/library/must-free-trade-be-reciprocal

Block, Walter, Joseph Horton and Debbie Walker. 1998. “The Necessity of Free Trade,” Journal of Markets and Morality, Vol. 1, No. 2, October, pp. 192-200

Block, Walter E. 2008 [1976]. Defending the Undefendable. Auburn, AL: The Mises Institute; available for free here: http://mises.org/books/defending.pdf

Block, Walter E. 2013. Defending the Undefendable II: Freedom in all realms; Terra Libertas Publishing House; isbn: 978-1-908089-37-3; http://store.mises.org/Defending-the-Undefendable-2-P10932.aspx ; http://www.amazon.com/Defending-Undefendable-II-Freedom-Realms/dp/1908089377/ref=sr_1_1?ie=UTF8&qid=1379098357&sr=8-1&keywords=freedom+in+all+realms

Brandly, Mark. 2002. “A Primer on Trade.” November, 4;

http://www.mises.org/article.aspx?Id=1084

Boudreaux, Donald J.  2010. “On Trade and Currency Manipulation.” January 5; http://fee.org/freeman/on-trade-and-currency-manipulation/

Boudreaux, Donald J.  2016A. “Should Gates clean his own toilets?” August 9; http://triblive.com/opinion/donaldboudreaux/10888506-74/workers-gates-wages

Boudreaux, Donald J.  2016B. “On Being Too Rigid & Dogmatic & Inflexible on Free Trade.” December 19; http://www.economicpolicyjournal.com/2016/12/on-being-too-rigid-dogmatic-inflexible.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economicpolicyjournal%2FKpwH+%28EconomicPolicyJournal.com%29

Boudreaux, Don. 2017. “Trump’s Ignorance Is Matched Only by His Thuggishness.” January 3; http://www.economicpolicyjournal.com/2017/01/trumps-ignorance-is-matched-only-by-his.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economicpolicyjournal%2FKpwH+%28EconomicPolicyJournal.com%29

Brandly, Mark. 2002. “A Primer on Trade.” November, 4;

http://www.mises.org/article.aspx?Id=1084

Brown, Pamela J. 1987. “Free Thought and Free Trade: The Analogy Between Scientific and Entrepreneurial Discovery Process,” The Journal of Libertarian Studies, Vol. 8, No. 2, Summer, pp. 289-292; http://www.mises.org/journals/jls/8_2/8_2_8.pdf

DiLorenzo, Thomas J. 2018. “Trade and the Rise of Freedom.” March 7;

https://www.lewrockwell.com/2018/03/thomas-dilorenzo/trade-and-the-rise-of-freedom/

Ebeling, Richard. 2018. “Trump’s protectionist follies threaten a trade war.” March 5;

https://www.fff.org/explore-freedom/article/trumps-protectionist-follies-threaten-trade-war/

Epstein, Richard A. 2016. “The Rise of American Protectionism.” March 14;

http://www.hoover.org/research/rise-american-protectionism

Folsum, Jr., Burton W.  1996. The Industrial Revolution and Free Trade

Friedman, Milton and Rose Friedman. 1997. “The Case for Free Trade.” Hoover Digest No. 4.http://www.hooverdigest.org/974/friedman.html

Gwartney, James, Robert Lawson and Walter E. Block. 1996. Economic Freedom of the World, 1975-1995, Vancouver, B.C.: The Fraser Institute

Hazlitt, Henry. 2008 [1946]. Economics in One Lesson. Auburn, AL: Mises Institute;

http://mises.org/books/economics_in_one_lesson_hazlitt.pdf

https://mises.org/store/Economics-in-One-Lesson-P33C1.aspx

Higgs, Robert. 2019. “What is This Mystical Magnetism that Nationalism Exerts on So Many Americans?” February 4;

http://www.economicpolicyjournal.com/2019/02/what-is-this-mystical-magnetism-that.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economicpolicyjournal%2FKpwH+%28EconomicPolicyJournal.com%29

Johnsson, Richard C.B. 2004. “On Ricardo and Free Trade.” January 12;

http://www.mises.org/article.aspx?Id=1421&

Krasnozhon, Leo, David Simpson and Walter E. Block. 2015. “Fair trade: Its Real Impact on the Working Poor.” The Review of Social and Economic Issues (RSEI). Vol. 1, No. 2, Spring, pp- 5-28; http://rsei.rau.ro/index.php/lasthttp://rsei.rau.ro/images/V1N2/Articol_1.pdf; translation by ‘Alexandru Butiseacă’ butiseaca@gmail.com

Landsburg, Steven E. 2008. “What to Expect When You’re Free Trading.” The NY Times. January 16; http://www.nytimes.com/2008/01/16/opinion/16landsburg.html?_r=1&scp=1&sq=Steven+E.+Landsburg&oref=slogin.

McGee, Robert W., 1994A. A Trade Policy for Free Societies: The Case Against Protectionism, Quorum Books.

McGee, Robert W. 1994B. “The Fatal Flaw in NAFTA, GATT and All Other Trade Agreements,” Northwestern Journal of International Law & Business, Vol. 14, No. 3, 549-565.

McMaken, Ryan. 2016. “To Oppose Free Trade Is To Embrace Violence.” https://mises.org/library/oppose-free-trade-embrace-violence

Mises, Ludwig von. Mises, Ludwig von. 1927. Liberalism: In the Classical Tradition. Auburn, AL: the Mises Institute; https://mises.org/library/liberalism-classical-tradition

Mullen, Tom. 2015. “Trump’s Protectionist Fallacies Have Been Refuted By Free Market Economists for Hundreds of Years.” August 31; http://www.huffingtonpost.com/tom-mullen/trumps-protectionist-fall_b_8056400.html

Murphy, Robert P. 2004. “Can Trade Bring Poverty?” December 24; http://www.mises.org/article.aspx?Id=1699

Ricardo, David. 1821 [1912]. The Principles of Political Economy and Taxation, 3rd ed., London: J. M. Dent

Roberts, Russ. 2016. “The Human Side of Trade.” December 11; https://medium.com/@russroberts/the-human-side-of-trade-7b8e024e7536#.nkypmt8hc

Rothbard, Murray N. 2005. Protectionism and the Destruction of Prosperity. Auburn, AL: The Mises Institute; http://mises.org/rothbard/protectionism.asp

Rouanet, Louis. 2016. “The Case for Unilateral Free Trade.” October 13;

https://mises.org/blog/case-unilateral-free-trade

Smith, Adam. [1776] 1979. An Inquiry into the Nature and Causes of the Wealth of Nations, Indianapolis, IN: Liberty Fund

Vance, Laurence. 2016. “Free trade is fair trade.” June 1;

http://www.fff.org/explore-freedom/article/free-trade-fair-trade/

Wenzel, Robert. 2018. “Pat Buchanan: Foundationtional War Hawk.” March 8;

http://www.economicpolicyjournal.com/2018/03/pat-buchanan-foundationtional-war-hawk.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economicpolicyjournal%2FKpwH+%28EconomicPolicyJournal.com%29

Wenzel, Robert. 2018. “Most Pro-Tariff and Anti-Tariff Supporters Use the Same Dumb Argument.” March 9;

http://www.economicpolicyjournal.com/2018/03/most-pro-tariff-and-anti-tariff.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economicpolicyjournal%2FKpwH+%28EconomicPolicyJournal.com%29

Williams, Walter E. 2017A. “International Trade Thuggery.”  January 18; https://www.lewrockwell.com/2017/01/walter-e-williams/free-trade-3/

Williams, Walter E. 2017B. “Trade Ignorance and Demagoguery.”  May 5;

https://www.lewrockwell.com/2017/05/walter-e-williams/the-us-is-protectionist/

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9:43 am on February 26, 2019