There has been much controversy recently about free trade and tariffs. Economists love free trade; if economics was everything and no other factors impinged, free trade would probably produce the greatest possible basket of economic goods and services.
To make that argument is, however, to fall into the ceteris paribus trap, which assumes everything else is held constant and we vary only free trade and its opposite, managed trade. The world doesn’t work that way.
Humans are a disputatious species, we squabble a lot as individuals and as nations, we get into wars. Wars consume vast quantities of munitions, equipment, and the fuel to support all of that, plus along the way they destroy major amounts of infrastructure. Nations which can produce what war consumes are credible forces, those which cannot become dependent on others and the vulnerable supply lines which connect them.
A nation which outsources most of its manufacturing has much reduced credibility as a warring power. The US has allowed itself to outsource too much essential manufacturing, which at its pre-World War II level was the source of our ability to overwhelm the Axis powers.
Our reliance on China to manufacture much of what we now consume while recognizing China’s overt desire to replace the US as the world’s hegemon is irrational. Pursued to its logical conclusion, the policy is suicidal for our society.
What might be optimal in an economic sense is irrational in a geopolitical sense. We must have a robust manufacturing sector which can produce war materials as needed, especially pharmaceuticals, computer chips, and munitions.
Leaving the make or buy decision to Adam Smith’s “invisible hand” - which the US has done in recent decades - doesn’t result in the sort of manufacturing base which will support major military activity, when it becomes necessary. To maintain our position in the world we need to be militarily credible.
Trump gets this need, and his tariffs are a means by which to recreate the manufacturing base we need for military strength, and in so doing also create millions of good-paying factory jobs. Thus he accomplishes two key things with one set of actions, and improves opportunities for many of the “forgotten folk” who voted for him.
