Trump's Tariffs Are a Tax on Americans

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Published : March 06th, 2018
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On Thursday March 1, the Trump administration announced plans to impose 25% tariffs on imports of steel and 10% tariffs on imports of aluminum.

The US President is of the view that without the required protection, the US steel and aluminium industries are likely to follow the deteriorating path and this in turn will undermine the US labor market.

The steps announced by the US President raises the likelihood of a global trade war. President Trump seems to believe that war is great and that the US will emerge triumphant.

One would have thought that out of all people, President Trump, who prides himself of placing America first, would never consider imposing tariffs. After all a tariff on any imported good implies curtailing the supply of less costly goods and encouraging the supply to the domestic market of more costly domestically produced goods i.e. punishing the domestic consumers i.e. the Americans.

Furthermore, by raising a protection wall to various inefficient domestic industries, Trump’s policies are going to promote inefficiency, thereby undermining the process of real wealth generation.

Also, the employment data contradicts the logic of Trump’s tariff policy. According to CNBC, while there are about 200,000 workers in the steel, aluminum and iron industries, there are 6.5 million people employed by businesses that use steel. This raises the risk of undermining rather than benefiting the US labor market.1

Given that President Trump prides himself as a successful businessman, he surely must be well aware that the ultimate goal of every business is to make profit. Hence, to succeed in this task as a businessman, Donald Trump will now allow government policies that are going to undermine the net worth of his company.

Yet for some strange reason the President is of the view that this is ok for the economy as a whole.

It did not occur to him that there is no such thing as an economy without individuals. If planned policies such as imposition of tariffs are going to weaken the process of wealth formation and undermine individuals wellbeing, obviously this is going to be bad news for the economy as a whole i.e. for America, which President Trump holds as number one on his priority list.

One could only hope that most countries such as China, the Eurozone and Canada will not retaliate to Trump’s tariffs and start a trade war to feed the ego of politicians.

By lifting tariffs on American imports, these countries will only make things much worse for themselves.

What is the point of punishing your own citizens because of a misguided economic policy of the US President? By curbing imports from the US to the domestic markets, one does not fix the negative side effects of US tariffs.

If all countries in the world were to impose tariffs on imports, this would quickly arrest international trade and lead to massive economic impoverishment.

In the words of Murray N. Rothbard,

The tariff principle is an attack on the market, and its logical goal is the self-sufficiency of industrial producers; it is a goal that, if realized, would spell poverty for all… It would be a regression from civilization to barbarism.

  • 1. See: "Trump’s tariff plan leaves blue-collar winners and losers," specifically: "The mills and smelters that supply the raw material, and that would directly benefit from the tariffs, have been shrinking for years. Today, those industries employ fewer than 200,000 people. The companies that buy steel and aluminum, to make everything from trucks to chicken coops, employ more than 6.5 million workers, according to a Heritage Foundation analysis of Commerce Department data." (
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Frank Shostak's consulting firm, Applied Austrian School Economics, provides in-depth assessments and reports of financial markets and global economies.
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