@realdonaldtrump is wrong in tariffs

Tariffs and the class war

https://twitter.com/Shoobhraa/status/641291779778543616

The difference between tariffs and quotas

Henry Simons on tariffs

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The fire of truth: Tariffs

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Imports from countries where labour is cheap causes our unemployment to rise

One of the many problems with this doctrine is that it ignores the question: why are wages low in a foreign country and high in the United States?…

Basically, they are high in the United States because labour productivity is high – because workers here are aided by large amounts of technologically advanced capital equipment.

Wage rates are low in many foreign countries because capital equipment is small and technologically primitive. Unaided by much capital, worker productivity is far lower than in the United States.

Wage rates in every country are determined by the productivity of the workers in that country. Hence, high wages in the United States are not a standing threat to American prosperity; they are the result of that prosperity…

we must realize that wages in each country are interconnected from one industry and occupation and region to another.

All workers compete with each other, and if wages in industry A are far lower than in other industries, workers – spearheaded by young workers starting their careers – would leave or refuse to enter industry A and move to other firms or industries where the wage rate is higher…

If the steel or textile industries in the United States find it difficult to compete with their counterparts abroad, it is not because foreign firms are paying low wages, but because other American industries have bid up American wage rates to such a high level that steel and textile cannot afford to pay.

In short, what’s really happening is that steel, textile, and other such firms are using labour inefficiently as compared to other American industries.

Tariffs or import quotas to keep inefficient firms or industries in operation hurt everyone, in every country, who is not in that industry. They injure all American consumers by keeping up prices, keeping down quality and competition, and distorting production. Tariffs and import quotas also injure other, efficient American industries by tying up resources that would otherwise move to more efficient uses.

Murray Rothbard

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