President Trump’s tariffs have caused upheaval and debate everywhere. From US citizens in Ohio, who think it’s a useful measure that will help them back to prosperity, to governments preparing retaliation, to stock markets freaking out, to penguins wondering how they ended up in the middle of all this.
Commentators who disagree with Trump’s measures rile about bullying and a disproportionate response to globalism and integration. Those in favour speak of protecting the US and restoring its industrial capacity.
And neither is entirely wrong.
A free market economy is driven by profits, by greed. Companies responsible to their shareholders have no incentive to protect their home base. With greater and greater profits their only driver, they will move and shift and shimmy in search of the cheapest products and most cost-effective production facilities. If those are abroad… so be it.
That’s why the countries that most fully embraced the free market economy now display a much-reduced manufacturing capability. Here in the UK, where Margaret Thatcher began to nationalise utilities in 1983, mining and heavy industry have largely disappeared. How many shipyards are left on the Clyde and Tyne? How many mines are still producing coal and minerals? How many steel mills are still in operation?
Fewer each year. And, in many cases, new industries are slow to replace those that move away.
Having grown up in a planned, state-controlled economy, I spent my first year in England watching the market turmoil, the fluctuation of interest rates, the descent of an economy into recession. I remember finding it fascinating to see my economy lessons in action, until I realised that each interest rate spike drove mortgages upwards and teetering companies out of business. I’d never seen the effects of business failure and unemployment, or the resulting poverty, and the accompanying rhetoric about opportunism and personal responsibility rang hollow.
Even now that I’ve experienced a free market economy for over thirty years, I think that protectionism has its benefits. What I can’t believe is that President Trump really has the US public’s best interests at heart.
For one, he gives the impression that he thoroughly enjoys disrupting the status quo. He’s smug about his choices. He talks tough and bullies and disparages other heads of state as if his opinion was the only one that mattered.
His calculations of the US trade deficit are lopsided, not including the vast array of services the US exports.
Most of all, he seeks to punish the countries the US trades with, rather than the companies who’ve abandoned the US in search of greater profits. Yes, there’s talk of re-shoring industry, but how likely is that to happen during a four-year presidential term, and when manufacturing in the US will always have a higher cost base than manufacturing in Asia?
Is there a middle ground between protectionism and free trade when subsidising home-grown industries will spark immediate complaints of unfairness and market-rigging? Do we really have to choose one or the other and suffer the drawbacks each has?
Economy, political or otherwise, wasn’t my favourite subject at university, but I’m fascinated by it now.
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