In an election year where both political parties have deployed tariffs as a tool of statecraft, @DemJournal asked @ENPancotti @mattyglesias and me to debate the pros and cons, when tariffs work, and when they are damaging.
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democracyjournal.org/magazine/74/ar…
Liz and I were assigned the "pro-tariff" side of the debate, though we offer caveats.
Our main argument is that it's too easy to put tariffs in a politics/public choice box, when in fact there are long established market failure reasons for their use.
Moreover, having taking the fork in the road towards industrial policy subsidies to internalize positive externalities from decarbonization, it would have been unwise policy/an abdication of fiduciary responsibility to allow imports to wipe out new clean industries.
We suggest some reforms, including making the trade remedies system less remedial/more proactive, using guardrails to constrain profiteering in protected industries, expanding trade to better service the climate strategy, and generally being better at stating goals.
That leads to one of @mattyglesias' major points, which is that imposers of tariffs need to be better at explaining the trade-offs involved in design decisions.
Matt also argues that national security reasons are a sufficient condition for imposing select tariffs, without needing recourse to economics.
He also argues that, if we are restricting trade with China for natsec reasons, we should compensate by freeing trade with allies.
In our response, Liz and I argue that there are practical reasons why tariffs get deployed when tackling market failures occurring outside US territory. The integrity of domestic policy regimes - including labor protections - benefit from a more level international playing field.
While agreeing aspirationally with Matt that freer trade with allies is a goal, Liz and I also note that have been recent practical difficulties in doing so, and that market shaping prerogatives should be placed on a level with diplomatic amity ones.
In his final essay, Matt turns to a major argument against tariffs - their effect on domestic consumers.
Matt also posits that domestic labor law reform is a better means of domestic redistribution than tariffs.
In the format of the debate, the conversation ends there.
But let me say for the record: labor law reform is indeed preferrable to tariffs as a means of redistribution, and helps poorer consumers finance their consumption basket.
Some ideas on that here: rooseveltinstitute.org/publications/s…
And, for a targeted and effective way to deploy trade tools, look no further than the dozens of cases @AmbassadorTai @USTradeRep have launched under the USMCA Rapid-Response Labor Mechanism, which has helped 30,000 workers exercise their rights.
ustr.gov/issue-areas/en…
In closing, the US is attempting to do something difficult: transforming its economy and all its parts and putting them on a sounder footing.
The challenge is distinct, but echoes that cited by FDR in his inaugural speech in 1933. avalon.law.yale.edu/20th_century/f…
Without the challenges of the climate crisis and Chinese model, we probably wouldn't be talking so much about industrial policy.
And without industrial policy, there wouldn't be so much tariff talk.
But here's where we are: let's make climate policy democratically viable.
END.
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