on March 8, 2025
Here’s a letter to the Wall Street Journal.
Editor:
Given Pres. Trump’s obsession with tariffs – and in light of the damage these punitive taxes on Americans will inevitably inflict on America’s and the world’s economy – it cannot be too often pointed out that the president is deeply confused about trade. As Greg Ip writes, Mr. Trump is determined both to eliminate U.S. trade deficits and compel foreign companies – in the president’s words – to “build their car plants, frankly, and other things, in the United States” (“Trump’s Golden Age Begins With a Brutal Trade War,” March 8).
It’s scary that the individual who now exercises titanic unchecked power over U.S. trade policy is unaware that U.S. trade deficits are matched by net inward flows of global capital to the U.S. – unaware that the increased foreign investments in the U.S. that he desires will raise, not lower, the U.S. trade deficits that he despises – unaware that, if U.S. trade deficits truly do cause him to suffer anxiety, his successful use of tariff threats to increase foreign investment in the U.S. will only make his anxiety worse.
Such power as Mr. Trump now exercises over trade policy would be dangerous even in the hands of a wise and well-informed sage. That this power is now in the hands of a volatile man who is colossally ignorant of even the most basic economics of trade is terrifying.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
