Scott Lincicome, Vice President of General Economics and Trade at the Cato Institute, recently criticized a common protectionist stance, labeling it as "cliché" and "hypocritical." In a social media post, Lincicome articulated his view on the economic fallacy of advocating for tariffs on competitors' finished goods while simultaneously seeking tariff-free access for one's own imported inputs. This perspective underscores a broader economic consensus regarding the self-defeating nature of such trade policies.
"I don't mean to dunk on this knife guy - really, I don't - but 'tariff my competitors, not my inputs' is abt the most cliché (and hypocritical) protectionism there is - and it's a big reason why tariffs don't work," Lincicome stated in his tweet. As a prominent international trade attorney and economist, Lincicome has consistently argued against tariffs, highlighting their significant economic costs and their failure to achieve stated policy objectives.
Economists largely agree that tariffs, while intended to protect domestic industries, often lead to unintended negative consequences. Tariffs on imported finished goods increase prices for consumers, who ultimately bear the cost. Conversely, tariffs on imported raw materials or intermediate components raise production costs for domestic manufacturers that rely on these inputs, diminishing their competitiveness in the global market.
Studies have frequently shown that any job gains in industries protected by tariffs are often offset by greater job losses in downstream industries that face higher input costs. This dynamic can lead to a net negative impact on overall employment and economic output. Furthermore, the imposition of tariffs frequently provokes retaliatory measures from trading partners, further harming domestic exporters and disrupting global supply chains.
Lincicome's critique emphasizes that the desire for protection from foreign competition on finished products, coupled with a demand for cheap imported inputs, represents a fundamental inconsistency in trade policy. This approach, he argues, undermines the very economic efficiency and growth it purports to foster, contributing to higher prices, reduced innovation, and broader economic uncertainty. The expert consensus reinforces that such selective protectionism ultimately proves detrimental to the national economy.