The Only Fair Trade is Free Trade: Why Trump’s Wrong on Protectionism

President Donald Trump announced that he wanted a 20 percent tax on softwood lumber coming from Canada. “We’re going to be putting a 20% tax on softwood lumber coming in — tariff on softwood coming into the United States from Canada,” Trump announced during a meeting with conservative journalists. He also signaled he wanted action on Canadian dairy products as well.

“We’re going to start doing lumber in our country, it’s going to mean that farmers are going to start selling milk in our country,” Trump said.

One of the problems with government intervention in the economy are the unintended consequences. Unintended consequences mean when you use government coercion to help one group at the expense of another, somebody gets hurt. And when somebody gets hurt, there are always economic ramifications. Who is President Trump to decide that groups who will benefit from this tax on Canadian lumber are more important—and have more rights—than those Americans who will be harmed by it, including consumers, builders or others who would pay cheaper prices for lumber? How is this any different from a Democratic administration providing special rights and favors to labor unions, which likewise have the impact of driving up prices for goods and materials that affect everyone?

Economically, the right role for the government is to stay out. It may seem appealing to say, “It’s better for American lumber to be made in America than elsewhere.” But such a statement raises the question, “Better for whom?” Sure, it’s better for some persons if lumber is made in America. But it’s better for others if it’s not. This does not only mean Canadians; it also means Americans.

“Americans” are not one lump whole with the same interests. Some will benefit by trading with Canadians, and some will not. But that’s true with any business enterprise. That’s why government intervention is not only uneconomical, but immoral. Protecting one group at the expense of the other is a violation of the rights of persons at whose expense the law is implemented. If government can sacrifice some individuals’ rights for the sake of others in this area, it can do so in any — and all — areas…as it increasingly does, sadly.

It will be interesting to see the real impact of these economic protectionist measures. On the one hand, it will help some economic groups, but there will be numerous unintended consequences. How will this affect consumers and builders, for example? When Democrats take money from one sector of the economy to “stimulate” another, there are always consequences, usually ones which result in lower and slower growth overall. Don’t kid yourself into thinking that just because a Republican President does so, it will be any different.

The best way to put America first again would be to remove the shackles, chains, taxes and regulations off the backs of American enterprise (large and small). To be fair, President Trump seeks to do that more than any Democratic president ever would. But he undermines his own good efforts when he tries to intervene in the economy elsewhere. Bad idea!

The only fair trade is free trade, because under free trade, all individuals are equal under the law. It’s such a shame for human progress and potential that more people do not understand this.