Retail sales were down for May with the AP reporting, “The figure was pulled down by a steep drop in auto sales, after Americans ramped up their car-buying in March to get ahead of Trump’s 25% duty on imported cars and car parts. Excluding autos, sales fell 0.3% in May.”
This is no surprise to my wife. In a recent visit to her favorite luxury import car dealer, she was told, “Germany hasn’t sent us any cars in six months. We have no inventory.” Expecting sympathy from her MAGA-inclined girlfriends when she says there are no cars to buy, they respond to this tariff anecdote with “good.”
One of my wife’s great regrets was never meeting Murray Rothbard. But his words explain what she’s annoyed about, “Protectionism not only injures the American consumer directly, by using coercion to prevent him [or her] from buying the cheaper textiles or cameras or automobiles that he [or she] would like to buy.”
In her case, it isn’t cheaper automobiles she’s looking for, but autos that she likes that are her preference and that are, in her mind, of higher quality than automobiles made in the US. She’s desired these cars since she was a little girl and now she can afford them, but current government policy is keeping her from getting a new one.
The administration’s tariffs will raise the price of domestic vehicles and keep auto workers employed. But at the same time “injure all American consumers by keeping up prices, keeping down quality and competition, and distorting production.”
My wife’s BFFs wax patriotic about all this tariff nonsense, believing the country will be better off. And believe me, no one in this group is missing any meals. But, as Rothbard wrote,
Protectionism is simply a plea that consumers, as well as general prosperity, be hurt so as to confer permanent special privilege upon groups of less efficient producers, at the expense of more competent firms and of consumers. But it is a peculiarly destructive kind of bailout, because it permanently shackles trade under the cloak of patriotism.”
“But tariffs are two things if you look at it,” the president said in October, in an interview with Bloomberg News editor-in-chief John Micklethwait. “No. 1 is for protection of the companies that we have here, and the new companies that will move in because we’re going to have thousands of companies coming into this country.”
The idea that foreign companies of any size will move their operations to the US in a matter of months is magical thinking. When Micklethwait said such changes would “take many, many years.” Trump’s retort was they will come right away. These companies will just pack a suitcase and catch a plane.
Ryan Zinke—who served as Secretary of the Interior for two years during Trump’s first term—tells us why Trump loves tariffs. “Tariffs are a tool the president enjoys because it’s personal power,” Zinke told HuffPost. “It’s personal ― he doesn’t have to go through Congress. He can exercise personal power.” Back in the good old days, tariffs took an act of Congress.
The president is a mercantilist. And, as Rothbard explained, “the mercantilist, of the sixteenth century or today, looks at trade from the point of view of the power elite, big business in league with the government.… the mercantilists want to privilege the government business elite at the expense of all consumers…” Even consumers who just want to buy a new car of her choice.
