Donald Boudreaux: A patently false excuse for tariffs
The Chinese are alleged to routinely steal intellectual property belonging to American companies that operate there. And this theft is said by many people to be the reason why President Trump has imposed tariffs on billions of dollars of Chinese exports to the United States.
For a number of reasons, I don’t buy this explanation of the president’s motives for imposing these tariffs.
First, because Trump repeatedly reveals his deep hostility to free trade, there’s no reason to believe that his tariffs are motivated only, or even mainly, by a desire to prevent IP theft. The likelihood is strong that the president and his trade advisers point to this theft merely as a convenient excuse for the protectionism that they would want under any circumstances.
Consider in this light Trump’s incessant yet misguided griping about the U.S. trade deficit with China. Because this trade deficit has nothing whatsoever to do with IP theft, we would hear no such griping if the main purpose of his tariffs were to protect American IP. The same can be said about Trump’s complaints about Beijing’s alleged currency manipulation.
Second, it’s nearly impossible for ordinary Americans to know exactly how much IP theft occurs in China. And so a protectionist administration, such as Trump’s, has powerful incentives to overstate the extent of such theft in order to amplify popular support for tariffs that are said to be imposed in retaliation.
Third, if Trump were truly interested in halting this alleged IP theft, his administration would file a complaint with the World Trade Organization (WTO), which has explicit procedures for settling such a dispute. As far as I know, the administration hasn’t done so.
Fourth, Trump’s allegations of Chinese law-breaking are hypocritical and ring hollow given that his unilaterally imposed tariffs are themselves a clear violation of WTO rules — rules that the U.S. government has agreed to follow.
Fifth, Trump’s tariffs are first and foremost punitive taxes on Americans who buy imports from China. That is, these tariffs are U.S. government actions that weaken and restrict the property rights of millions of Americans. It is unjust for our government to violate the rights of one (large) group of Americans in the name of protecting the rights of another (smaller) group of Americans. The right of we American consumers to spend our earnings as we choose is not, and ought not be made to be, subordinate to the right of American producers who operate in China not to have their IP stolen.
Sixth, American victims of China’s IP theft could avoid much of this theft simply by refusing to do business in China. And yet many American companies continue to do business there. This reality strengthens the fifth point. Why should Uncle Sam restrict the freedom of millions of Americans in order to protect the property rights of other Americans who voluntarily — and, apparently, also profitably — put their property at risk by operating in China?
Once again, if the president were a credible free trader, his identification of Chinese IP theft as a reason to impose tariffs on Americans who buy Chinese imports would be believable even to those of us who would nevertheless oppose such tariffs. But because Trump is, and has long been, a cartoonish protectionist, he has zero credibility when he offers superficially plausible reasons to impose punitive taxes on American buyers of imports.
Donald Boudreaux is a professor of economics and Getchell Chair at George Mason University in Fairfax, Va. His column appears twice monthly.