How Republicans Learned to Love High Prices
Donald Trump’s allies have pivoted from denying that his tariffs will hurt consumers to insisting that consumers should welcome the pain.
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How Republicans Learned to Love High Prices
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Alternate title: Take your medicine and like it, plebeians …
“… The counterargument—until recently associated with the political left—is that cheap and varied consumer goods are not worth sacrificing the strength of America’s domestic-manufacturing sector. Even if we accept that (
questionable) premise, however, it doesn’t justify Trump’s tariffs, because those tariffs will hurt domestic manufacturing too. About
half of U.S. imports are intermediate goods, raw materials, and capital equipment that American manufacturers use to make their products and sell them here and abroad. Contrary to conventional wisdom, these imports
increase domestic-manufacturing output and jobs. Thus, for example, an expanding U.S. trade deficit in automotive goods has long coincided with gains in domestic automotive output and production capacity, and
past U.S. tariffs on steel and aluminum caused a slowdown in U.S. manufacturing output. Even if domestic manufacturers don’t buy imported parts, simply having access to them serves as an important competitive check on the prices of made-in-America manufacturing inputs. This is why Trump’s recent steel-tariff announcement
gave U.S. steelmakers a “green light to lift prices,” as
The Wall Street Journal put it.
…
Imports such as construction materials, medical goods, and computers also support many U.S. service industries. And imports are important for leisure and economic mobility. By trading for necessities instead of making them ourselves, Americans have more free time to use for fun or self-improvement (and more disposable income to pursue such things). According to a
new studyin the
Journal of International Economics, “between 1950 and 2014, trade openness contributed to an additional 20 to 95 hours of leisure per worker per year”—invaluable time we can devote to entertainment, family, community, or education.
“Access to cheap goods” isn’t the American dream, but it sure helps us achieve it. This is particularly true for low-income workers who have tight budgets and little leisure time. Shelter, food, transport, utilities, and clothes
accountedfor approximately 68 percent of the poorest 20 percent of U.S. households’ annual expenditures but just about half of the richest 20 percent of households’ spending.
It’s easy for someone worth, say,
$521 million, like Bessent, to pay a few bucks more for everyday goods and still achieve his goals and ambitions; it’s far more difficult for a single mom with four kids to do the same….”
