As President Trump proceeds with his tariff policy and an appeals court prepares a ruling on whether that policy is lawful in the first place, some are claiming that tariffs fundamentally violate various conservative economic and Constitutional principles.
As President Donald Trump proceeds with phase two of his tariff policy and an appeals court prepares a ruling on whether that policy is lawful in the first place, some are questioning how anyone who calls themselves conservative can continue to support the administration in this regard, claiming tariffs fundamentally violate various conservative economic and Constitutional principles. On the economic side of this proposed principle equation, it’s said that conservatives should favor lower tax rates in general and tariffs are by definition a tax increase, making them unacceptable in any or at least most circumstances. While this might be nominally true in isolation, conservatives are also in favor of sound fiscal policy which requires our expenditures better match our revenues, rather than the current deficit driven state of affairs where around $15 trillion has been added to the national debt in just the past five years. Indeed, during the recent rather vociferous debate over the Big Beautiful Bill, many who called themselves conservatives claimed their principles wouldn’t allow them to support the measure because it increased deficit spending and raised the debt ceiling by some $5 trillion. In their view, such profligacy was unacceptable in principle and efforts to better balance the budget were essential, meaning some combination of spending reductions and tax increases would be required either in the short or medium term. As most are aware, President Trump has chosen to address spending with various measures including reducing the overall federal workforce by over 51,000 with more to come and trimming billions of dollars from the budget including the shuttering of entire departments. From this perspective, we should view tariffs as his chosen means to increase revenue and as such, they are expected to raise around $300 billion per year, about a quarter of the current deficit. In fact, none other than the New York Times recently conceded that they might be here to say simply because they generate a lot of much needed money. Of course, some would argue that tariffs in particular are not the right kind of taxes to achieve these goals, but the question, for our purposes, is do they do they raise revenue in a way that violates other conservative principles?
In this regard, there are those who insist that they must because tariffs are somehow uniquely paid by the consumer, whether or not producers reduce prices to compensate as Japan has done with their auto exports, and yet the same argument can clearly be applied to any tax. Ultimately, there is no money in the economy save what consumers spend, either on goods or services or to the government via taxes, making taxes by definition a cost that must be paid one way or another when neither businesses nor the government has any monies of their own. This is true whether the cost is in reducing the amount of money people have in their pocket (income taxes), increasing the price of products at the point of sale (sales taxes), increasing the costs of doing business (corporate taxes), or even decreasing the return on investment (capital gains taxes). While some might acknowledge that as true, they could still object that tariffs are particularly loathsome because they interfere with the free market by manipulating trade. Setting aside that a similar argument can be made for corporate and even income taxes, where companies and some people report earnings wherever the lowest rates are available, and rates are not equal around the world, this assumes two things. First, that the global market is in a meaningful sense “free,” that is it is operating without government interference or restrictions, or at least with a minimum of them. Fortunately or unfortunately depending on your perspective, that is clearly not the case when we live in an era where US regulations alone as contained in the Federal Register number over 90,000 pages, not to mention a web of international treaties, other arrangements, and competing policies in other countries, almost all of which interfere with the operation of the market on a minute-by-minute basis with or without tariffs. Thus, it doesn’t necessarily follow that the principle of free markets should be our overriding concern when considering strategies to raise revenue. Instead, like every other government action that interferes with the free market, we should look at tariffs in terms of costs and benefits. Are the benefits preferential to the costs compared to other forms of taxation? In this regard, I would suggest that tariffs are potentially superior to other options, ironically because of the way they interfere with the market. Tariffs are collected during the importation process and hence increase the prices of imports exclusively, whether finished goods or raw materials. This, however, serves to reduce the price difference between American products and imports, making them more competitive. Even if this competitiveness is achieved via market manipulation, at least somewhat similar to a subsidy, the end result will be more money flowing into American companies and hence to American workers. Given that only about 14% of GDP is driven by imports and most Americans spend their money domestically (housing, entertainment, food, etc.), this increase is likely to drive more wealth over time.
Further, tariffs combined with trade deals as President Trump has negotiated with the European Union, Japan, South Korea, Vietnam, Indonesia, and the Philippines have the potential to compound that increase by opening up American goods to new, now tariff free markets. While the administration has admittedly over emphasized reshoring jobs that have been lost, the real key to creating new manufacturing opportunities in my opinion is to increase exports. Decreasing the costs of American goods sold in other countries by eliminating or reducing tariffs on our products is essential to achieving that goal. Though President Trump has consistently negotiated deals that have done so and is promising more in the future, some have objected that these deals leave in place tariffs on products the countries in question import to the United States. For example, after the European Union framework was announced last week, several commentators objected that EU countries still have to pay tariffs to export goods to the United States, claiming the deal was unfair in principle. For example, BBC News described it as a “big Trump win but not a total defeat” for the European Union. “The EU was in a weak position, I’m afraid. It had no choice. Trump was not going to back down and it settled for 15%, so it’s a bad day for international trade, frankly. But it could have been worse,” former EU trade negotiator, John Clarke, told the outlet. In other words, these deals are said to violate some principle of fairness between countries, but conservatively speaking, at least in my mind, there is no such principle to be had. The Constitution doesn’t make the President the President of the World. The “We the people” are the people of the United States, and while we should strive for openness, transparency, and goodwill in our international relations, there is no overriding principle that requires us to negotiate a worse deal because another country might have to pay more than we do. If anything, one might say that doing so violates the President’s own oath of office and therefore should be considered a violation of conservative principles. The reality, as President Trump has revealed with these trade deals, is that the international community needs access to the US market more than we do theirs. Putting this another way, there is no other place for Japan or Germany to sell their cars. They can either choose to accept a moderate tariff – or lose the sale entirely. In fact, to a large extent this is what the trade deficits President Trump frequently cites really are – countries are exporting more to us than we are because we are buying more than they are. If we started buying less, however, there is no other place for them to export, no other consumer with the money to make the purchase. As CNN of all places recently described it, “at its core was a concept that been a consistent throughline of an otherwise chaotic economic timeline: leverage.”
Still others have pointed to even more fundamental principles of American governance, namely that the Constitution mandates that tax and spending bills must originate in the House of Representatives and that President Trump’s use of the tariff power is unconstitutional by definition. At least some who make this argument believe the courts must intervene to prevent the tariffs from going into effect, and that potential action is also required by the Constitution. While this is admittedly a complex argument, there are several reasons why conservative principles would lead me at least to disagree – even if we agree with the Constitutional principle that taxes and spending should originate in the Congress. This is because Congress has already granted the President a wide range of authority, including tariff powers, under three separate bills including Section 232 of the Trade Expansion Act of 1962; Sections 122, 201, and 301 of the Trade Act of 1974; Section 338 of the Tariff Act of 1930; and the International Emergency Economic Powers Act of 1977. As a result, most modern Presidents since Lyndon Baines Johnson have levied tariffs in some capacity. President Johnson himself placed a 25% tax on all imported light trucks. President Bill Clinton imposed tariffs of up to 100% on Waterford crystal, Italian cheese, and other European goods. President George W. Bush levied tariffs on imported steel. President Barack Obama put on tariffs from China. President Joe Biden increased existing tariffs on China. While we might debate the wisdom of these policies, that the President had the authority to do so under various acts was not in dispute and while we can agree that President Trump’s approach is far broader, that is a difference of degree not kind, making it an amount not a principle. The original decision which ruled the tariffs unlawful and which is now pending appeal acknowledged this outright. Contrary to conventional wisdom, the judges at the International Court of Trade did not rule that the President has no tariff power at all, merely that it “does not read IEEPA to confer such unbounded authority” and that the current tariffs “exceed any authority granted to the President by IEEPA to regulate importation.” If that is the case, there is nothing to prevent the President from issuing the same tariffs piece meal rather than all at once or under some other law, which means the Court is putting itself in the position of managing the day to day affairs of the executive rather than ruling on a matter of principle. If that’s the case, the conservative principle at play in my opinion is the separation of powers in a system of government where all branches are equal. From that perspective, the court has no right to intervene in a management capacity, save to conclude the entire delegated tariff system is unlawful. If they stop short of that, which they already have, it is up to Congress to decide the matter by either letting President Trump continue or rewriting the laws in question. That they have failed to do so is a principle in and of itself, one more important and fundamental in my mind than anything else.
Confessions of a Conservative Atheist 