The one thing we can be certain of as Americans is that we will find new ways to repeat the errors of the past.
This morning the news broke about the new tariffs that the United States will be imposing on Chinese goods in a manner reminiscent of the mistakes made in 1930. This excerpt from the story via Yahoo Finance demonstrates the stupidity of this protectionist move:
Other increases announced Tuesday include an jump in solar cell tariffs that are set to double from 25% to 50%. There will also be a bump in semiconductor tariffs from 25% to 50% and an increase on the tariffs on battery parts to 25%.
Other industries will see new duties entirely. Ship-to-shore cranes will see new tariffs jump from 0% to 25%. Syringes and needles will increase from 0% to 50%.
Keep in mind that this includes a 100% tariff on Chinese EV imports of which the United States imports exactly zero units on an annual basis. This particular tariff is a demonstration of the weakness within the US auto manufacturing industry’s inability to compete on the global stage and willingness of the regime in DC to engage in protectionism for the sake of preserving union jobs rather than encouraging efficiency and modernization.
What is even worse are the phased increases in tariffs on key strategic minerals and metals which will cause domestic production costs to skyrocket as the US has its own inane regulations preventing the rapid development of our own capabilities at a financially competitive level.
Whenever a nation engages in protectionism before having sufficient manufacturing capacity to replace the goods being taxed, it is shooting itself in the foot. Unfortunately for the dimwitted politicians and union leadership that thinks this will impair the Chinese companies, there is a larger market in the rest of the world and their cheaper goods will simply crowd out American offerings on the global stage.
The high valuation of the US Dollar in addition to the growing distaste for American foreign policy via interventionism is hurting US corporation’s ability to compete on the global stage. In the end, America’s dependency on Chinese goods, and that of other Asian nations, will not be deterred but felt via inflation at the consumer level.
Protectionism is the last resort of a nation unable to compete on the global stage and as Ludwig Von Mises once said, the philosophy of protectionism is the philosophy of war. America and China are inching closer to a depressing conclusion of these affairs on the global stage which will eventually become a military conflict.
I leave my reader’s with this quote from the 1905 book Protection or Free Trade by Henry George:
The efficient cause of the trade which our tariff aims to prevent is the desire of Americans to buy foreign goods, not the desire of foreign producers to sell them. Thus protection really prevents what the “protected” themselves want to do. It is not from foreigners that protection preserves and defends us; it is from ourselves.
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