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Trade, Inflation and the Trump Tariffs

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Jan. 11, 2022 5:08 pm ET

A shopper leaves a Best Buy store with a purchased television during Black Friday sales in New York, November 2021.

Photo: SHANNON STAPLETON/REUTERS

In “Joe Biden’s Inflationary Trade Policy” (op-ed, Jan. 5), William Walker and Stanton Anderson attempt to blame President Trump’s tariffs as the “real culprit” for President Biden’s inflation. Yet there was virtually no inflation for nearly three years after the Trump tariffs on steel and Chinese goods first went into effect in 2018. What changed in 2021 was massive new government spending and a disastrous new energy policy. That toxic combination—along with excessively easy monetary policy and loads of new regulation—is what caused inflation, not tariffs.

Tariff revenue may reach $100 billion this year, up threefold from 2016. That’s important, but it’s a rounding error in the context of a nearly $21 trillion economy. The Progressive Policy Institute recently estimated based on studies published in 2019 that the tariffs on Chinese goods at most have added 0.1 to 0.4 percentage points to an inflation rate that was near 7% in November. I suspect even that low estimate is too high, given steps companies have taken to restructure supply chains and avoid tariffs. But even if it is anywhere near accurate, that’s a small price to pay to lessen our dependence on China and protect U.S. jobs.

The authors are not simply wrong about inflation. They are equally wrongheaded in viewing trade policy solely through the lens of consumption. The consumption-first policy they advocate led to the loss of millions of jobs, the breakdown of families and communities, unprecedented income inequality and trillions in accumulated trade deficits. It left us wholly dependent on our chief adversary as our main supplier of pharmaceuticals, PPE, rare-earth minerals and other critical goods.

The consumption-first policy was a means of looking the other way as China stole our technology, manipulated its currency and used massive subsidies and other unfair practices to destroy entire U.S. industries. Messrs. Walker and Anderson seem to think that the cheap TVs and T-shirts we received in exchange meant this was a good bargain. I think not. If we are to have a great country and economy, we need to think of our citizens first and foremost as producers, not consumers. That’s certainly how our competitors view themselves.

Robert E. Lighthizer

Palm Beach, Fla.

Mr. Lighthizer was U.S. trade representative (2017-21).

Messrs. Walker and Anderson are wrong to blame inflation on the trade policy of Presidents Trump and Biden. The authors make the all-too-common mistake of confusing changes in the level of prices with changes in the growth rate of the level of prices. While tariffs make goods more expensive, this effect occurs only once. Tariff rates would need to be continually rising to explain the sustained increase in the level of prices.

Besides, the share of goods affected by tariffs represents too small a fraction of total U.S. output to account for the overall increase in the level of prices we experienced last year. There are legitimate reasons to oppose new U.S. trade policies, but inflation isn’t one of them.

Asst. Prof. Bryan Cutsinger

Angelo State University

San Angelo, Texas

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