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More Protectionism and Regulation Won't Fix the Economy

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Tags ImmigrationProtectionism and Free TradeWar and Foreign Policy

05/13/2020

In the wake of the COVID-19 pandemic and its attendant economic strains, some protectionists and anti-immigration ideologues are trying to take advantage of this opportunity to advance their nationalist agenda. They argue that if the United States had restricted international trade and immigration more thoroughly in the past, as President Trump had fought to achieve, the public health crisis could have been curtailed. Some are also arguing that imposing further restrictions will strengthen the economy and protect Americans from the coronavirus. 

Both of these assertions are demonstrably incorrect.

Should Employers Be Allowed to Hire Whom They Want?

On April 20, Trump announced via Twitter that in order to combat the “Invisible Enemy” and to protect Americans’ jobs, he was unilaterally suspending all immigration to the United States. His most adoring fans applauded the order, parroting the idea that it would somehow shield Americans from the virus. 

As a response to the pandemic, the move was questionable to say the least. The first confirmed case of COVID-19 in the US came not from an immigrant, but a domestic traveler. At the time of Trump’s announcement, there had already been nearly eight hundred thousand coronavirus cases in America, so it is unlikely that prohibiting immigration would have had any effect on the spread of the disease. 

As a response to the economic calamity, the immigration suspension was ludicrous. Americans lost their jobs not due to an influx of immigrants, but because of government-imposed lockdowns in response to COVID-19. Obviously, companies forced to shut down are not in the business of hiring anyone. 

For those companies that are hiring, an immigration suspension would only make it more difficult to provide vital products. Agricultural firms, such as farms and meat-packing plants, rely on immigrant labor. Immigrants also make up a disproportionate share of healthcare workers; nearly thirty percent of all physicians in the United States are foreign born. In the middle of a pandemic, what sense would it make to prevent the healthcare industry from recruiting more migrant doctors?

Thankfully, it seems that the Trump administration understands that a blanket ban on immigration would be harmful to the country. According to the president’s executive order, the government will continue to process visas for temporary agricultural workers and, most notably, essential healthcare personnel. 

Nonetheless, the administration’s ban does not bode well for the future of immigration policy. Tepid though it might be, by stripping American businesses of the right to hire whom they please, the ban represents a major step toward granting the federal government more control over the labor market. 

Pandemic Protectionism

There is even less reason for optimism when it comes to international trade. Besides a very limited tariff payment reduction and deferral, the president has thus far offered little respite from his protectionist trade policies. Such policies have only served to exacerbate the current crisis.

In 2018, the government imposed massive tariffs on Chinese-produced medical supplies in order to discourage imports, with the ostensible goal of incentivizing American companies to manufacture them domestically. The tariffs had the intended effect: American purchases of Chinese medical products fell, but hospitals also received fewer and more expensive supplies than they otherwise would have. The government thus created a shortage of vital supplies just before the country hurtled into the worst public health crisis in a century. 

The administration’s refusal to eliminate tariffs and other impediments to trade is no doubt motivated by an ideological commitment to scaling back American reliance on China. To enact any significant trade reform at this point would be to admit that the president’s prior trade policies were ill advised. 

Even now there are those who argue that not only should tariffs be kept high, but we ought to impose more restrictions on imports. Representatives Mike Gallagher and Tom Cotton, for example, have proposed legislation that would completely ban health facilities from purchasing pharmaceuticals and medical devices if they’re produced in China. They would also offer federal subsidies to domestic producers. The bill’s more draconian measures would not go into effect until 2022, but that hardly allows hospitals or American medical suppliers enough time to adequately adjust, especially given that we are currently in the midst of a pandemic. 

Of course, that’s not to say that there is no case to be made for reducing American reliance on Chinese-manufactured medicine (though that reliance has been grossly overstated). But to double down on the same ham-fisted protectionist policies that contributed to the country’s lack of pandemic preparedness in the first place may have catastrophic consequences if the virus returns in successive waves. 

If we wish to avoid shortages of crucial medicine and hospital equipment, then we need to repudiate the proposals of aspirant central planners, while allowing market actors to figure out where resources would be most efficiently allocated.

Author:

Tyler Curtis

Tyler Curtis is a lender at a community bank in Missouri, and earned an undergraduate degree in economics from the Missouri University of Science and Technology.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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