The producers of a product, including both owners and workers, in protected industries gain, again even if society loses. So, producers often lobby governments to impose tariffs to protect their industry.
Thus, weak politicians around the world buckle under to groups that benefit from tariffs, hoping to get them as political allies and gain their votes in elections. These are concentrated benefits that only a few obtain, but the few really notice their gains. Sure, there are costs for society, but these costs are spread over many more people and the weak politician hopes they will not be felt as much nor cost them many, if any, votes.
Of course, in Donald Trump the U.S. has anything but a weak politician. So, what is he doing? He has said at various times he favors free trade, but that trade now is anything but free for U.S. goods. What he may be doing is providing cover for weak politicians around the globe. Mark Carney, the new prime minister of Canada, has not been able to stand up to the Canadian dairy farmers’ lobby, but he may well have to now, faced with the Trump tariffs. And he can say to the Canadian dairy farmers, “Don’t blame me, it’s that Trump guy.”
Over the next few months lots of weak politicians around the world may be forced to stand up to various tariff pressure groups in their countries, saying, “It’s not me, but that Trump guy.” If this comes to pass, President Trump may become the greatest free trader in world history. And if that comes to pass, as usual, he will get little to no credit for it.
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About the Author: James L. Swofford is a Professor of Economics in the Department of Economics, Finance and Real Estate at the University of South Alabama.
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More articles edited or written and posted by Roger Landry (TLB)
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