The Foundational Problem with Tariffs

I think our duty to a representative and limited government, a constitutional republic, doesn’t end when we exercise one day of democracy — Election Day and the vote.  If our candidate makes mistakes, it’s up to each of us to speak out — not to criticize, but to educate, to ask him to do better.  The following is an attempt to apply principle to the specific issue of tariffs and the overarching principle of constitutionally limited government. 

Congrats: Any citizen who consumes (buys) goods made in China, you are going to pay 35 to 50 percent more for everything you buy from that country.

To say it another way, China does not pay this tariff.  Consumers do.  If that’s how my government helps, please stop.  

The argument supporters make centers on repatriating American manufacturing.

But consider why businesses moved their production overseas in the first place: Certainly lower-cost labor, but also less regulation from the foreign government and low tax rates, resulting in lower cost of manufacturing and higher earrings.

Ask the same question but from a different perspective: Why did business decide to move production out of America?  High costs of regulation and high tax rates.  In other words, our own government created an untenable business environment through its bureaucracy and high tax rates.

Higher tax rates are caused by excess federal spending.  Higher taxes are spurred by congressional spending.  If it didn’t spend so much, the government wouldn’t have to take so much of our income through taxes.  Turn the kaleidoscope around, and you get a new view…

In an attempt to justify a bloated bureaucracy (the “more government is always better” mentality) and excessive federal spending, our own government decided to hurt citizens and private industry through higher taxes and more regulation.  Well, this same mentality (bigger government) caused businesses to move manufacturing overseas in the first place.

Consider the absurd irony of these tariffs: Our government is trying to solve a problem it created — an unhealthy business environment of high tax rates and regulation — by creating an even more oppressive consumer environment (higher tariffs).

DOGE is a brilliant idea because it targets excessive government spending.  Overturning the Chevron doctrine reduces the negative impact of federal regulatory agencies on business.  These are two of the most positive developments during the current administration.  However, the same administration levies tariffs on its citizens and goes on to promote a Big Ugly Bill that adds $2.5 trillion of new debt, via excessive government spending, to be piled on our children and grandchildren.  

These bizarre tendencies, these internal contradictions are symptomatic of all administrations because they are acting according not to principle, but to self-enhancement.

A conditional principle (one subject to manipulation) is just an opinion.  True principle requires an honest assessment of the effects of our actions — and the discipline to act according to that principle.   For my money, the principle is the sanctity of your individual rights to life, liberty, and ownership of property.  That requires a severely limited government.  Not a government that expands insanely, as has this and every government since Reagan.

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About the Author: Jay Davidson is founder and CEO of a commercial bank.  He is a student of the Austrian School of Economics and a dedicated capitalist.  He believes there is a direct connection between individual right and responsibility, our Constitution, capitalism, and the intent of our Creator.