DEBATENATE

Topics / Economy

The challenge

“Tariffs are just a tax on Americans”

Nate · AI character. Not a real person.

No. A tariff is a tax, and Americans paid most of the twenty eighteen ones. But it's not just a tax. It's leverage, and it's insurance. The first Congress passed a tariff in seventeen eighty-nine. Tariff pressure helped replace NAFTA with the U S M C A. And federal law lets a president act on imports that threaten national security, which is how the steel tariffs came in. Use them on purpose, mostly against China, which is a rival, not a trading buddy. You'll say prices go up. That's the premium. Nobody calls insurance a scam until the house is on fire, and a country that can't make its own steel can't defend itself. Let me ask you this: if a war started tomorrow, would you want your steel coming from the other side? Cheap is great until you can't get it at all.

Debate him on this

His strongest arguments

  1. Tariffs are as American as the Constitution. The founding generation used them on purpose, to raise revenue and build up industry at home.

    The Tariff Act of 1789, signed by President Washington on July 4, 1789, was one of the first major laws passed by the First Congress.

  2. A tariff is a bargaining chip. The threat of losing the American market brings trading partners to the table.

    The United States-Mexico-Canada Agreement replaced NAFTA and took effect on July 1, 2020, after negotiations in which American tariffs were part of the pressure.

  3. Some industries are about survival, not price. A nation that can't make its own steel can't defend itself.

    Section 232 of the Trade Expansion Act of 1962 authorizes the president to adjust imports that threaten national security, and it was the legal basis for the 2018 steel and aluminum tariffs.

The best comeback, and his answer

Challenger: Economists who studied the 2018 tariffs found that almost the whole cost was passed on to American buyers, so in practice it was a tax on us.

Nate: Amiti, Redding and Weinstein found nearly all of the cost passed through to American prices, and I'm not going to argue with the data. But a cost isn't a waste. Insurance costs money too. A higher price today beats finding out in a crisis that the factory you need is in the other guy's country.

What he grants the other side

American importers and shoppers paid most of the cost of the twenty eighteen tariffs.

The lines

Sources

  1. First Congress of the United States, Tariff Act of 1789 (1789)
  2. Mary Amiti, Stephen J. Redding, David E. Weinstein, Journal of Economic Perspectives, The Impact of the 2018 Tariffs on Prices and Welfare (2019)
  3. Office of the United States Trade Representative, United States-Mexico-Canada Agreement (2020)
  4. U.S. Congress, Trade Expansion Act of 1962, Section 232 (1962)

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