Trump promises to slam a 100-percent tariff on [Update:] imported cars made in Chinese-owned factories in Mexico. He announced this not to a group of prospective car buyers but to a group of car makers. So what else is new? Car buyers, who outnumber the well-organized car makers but are not themselves organized, would have to pay more for cars they do not want if Trump got his way. That’s the point.
This is America first? No, it is not. It is “An Interest Group Whose Votes I Want” First versus everyone else. That’s always the case with protectionism. Stopping consumers from buying whatever they want helps some (in the short term) at the expense of the rest. Calling the favored group “America” is self-serving special pleading. Trump’s good at that. He thinks he knows better than you.
Trump is just another special-interest-pandering politician. Many people are fine with that because they misunderstand markets and dislike foreigners. But as Adam Smith taught us long ago, the wealth of a nation is determined by the people’s free access to the world’s products and not by how much they are cut off from those products. We produce to consume. We don’t consume to produce.
David Friedman cleverly points out that cars can be produced in two ways: the old-fashioned factory way and by, say, growing grain, loading it on ships headed to, say, Japan, and welcoming the returning car-laden ships. Both production methods are legitimate, and which one prevails should be left to free people making choices in a spontaneously ordered marketplace. Trump obviously never learned about the law of comparative advantage.
