Are President Trump\u2019s tariffs proving that two and a half centuries of economic analysis exaggerated the virtues of free trade? Have economists been wrong all these years to insist that consumers should be free to buy imports even when the prices of imports are quite low and their purchase takes business away from particular American firms and workers?<\/p>\n
Most economists, including myself, believe not. But if we\u2019re mistaken, our professional duty demands that we point out that Trump\u2019s protectionism is insufficiently ambitious; it should go much further. Trump\u2019s protectionism overlooks a source of low-priced goods that poses a far worse threat than do foreign producers to American producers and workers. That source of low-priced goods is the past.<\/p>\n
Goods sold in resale markets cost nothing to manufacture today. If, as Trump and other protectionists argue, it is necessary to tariff goods imported from abroad to protect US manufacturers from low-cost foreign competitors, then it is equally necessary to tariff goods imported from the past. The past exports to us at much lower costs than even the cheapest foreign producers.<\/p>\n
Someone in Boston who buys a used Buick from his neighbor withholds demand from US-based automobile producers no less than does someone in Houston who buys a new Hyundai from Korea. Were it true that taxing Americans\u2019 purchases of imported cars is a just means of stimulating US automobile production, it must also be true that taxing Americans\u2019 purchases of used cars is an equally just means of achieving this same goal.<\/p>\n
The gains from such a tax could be huge. Last year, Americans spent $217 billion buying 7.7 million imported vehicles<\/a>. That seems like a lot. But these figures pale beside the $1 trillion<\/em> that we spent buying 37.4 million used vehicles<\/a>.[1]<\/sup> By tariffing only cars imported from abroad, the government leaves US automakers vulnerable to a source of competition far larger and more potent than foreign automakers: the past. Not only do used cars cost nothing today to produce, the life expectancy of automobiles is rising.\u00a0<\/p>\n A new car today lasts twice as long as one did fifty years ago<\/a> and 43 percent longer<\/a> than 30 years ago. Cars\u2019 rising durability means that the past is dumping ever-larger numbers of cheap vehicles on our market.<\/p>\n Even bigger gains for American workers would come from tariffs imposed on sales of used homes \u2013 sales that obviously provide far less employment for carpenters, electricians, masons, and other construction workers than do sales of new homes. In 2024, Americans bought 4.06 million used homes<\/a> at a total cost of $1.65 trillion.[2]<\/sup> That\u2019s nearly five times more than the $350 billion we spent to buy 683,000<\/a> new homes.[3]<\/sup> If ordinary Americans are enriched when the government protects workers from imports that can be produced at a fraction of the cost of producing new American-made outputs, there\u2019s no reason not to impose high tariffs on homes imported from the past.<\/p>\n And as with automobiles, as houses become sturdier<\/a>, the market will be flooded with larger and larger numbers of homes imported from the past. The president and other protectionists surely cannot ponder this reality without wanting to protect America\u2019s construction industry from that low-cost competitor.<\/p>\n Automobiles and housing are far from the only goods whose increased longevity results in more of them being imported into the present from the past. Between 1980 and 2000<\/a>, the expected mileage of automobile tires rose by 38 percent, and since 2000 by another 50 percent<\/a>; in 1980, we Americans could expect tires to last 29,000 miles while today we can expect 60,000 miles. In consequence, today\u2019s demand for new automobile tires is lower than it would be if we Americans were prevented from keeping our tires for as long as we now do.<\/p>\n Or consider lightbulbs. Today\u2019s LED bulbs last an amazing 20 to 25 times longer<\/a> than their incandescent ancestors from just a few years ago. Similarly, the greater abundance of rechargeable batteries<\/a> reduces the demand for newly made ones.<\/p>\n We\u2019re also importing more clothing from the past to compete with today\u2019s producers and retailers of new clothing. Consumer demand for used \u2013 \u201cvintage\u201d \u2013 clothing is rising<\/a>. And this demand is significant: In 2023, eight<\/a> percent<\/a> of Americans\u2019 spending on clothing was for pre-owned apparel. That\u2019s spending that high tariffs on sales of vintage clothing could shift to the market for new clothing, thus helping to restore employment in US textile mills.<\/p>\n Among other goods that we are importing in increasing quantities from the past are restaurant equipment<\/a>, furniture<\/a>, and consumer appliances. Spending on the last of these second-hand items is projected to grow by about 25 percent by 2032<\/a>.<\/p>\n And what is recycling if not a concerted effort to import glass, plastics, paper, and metals from the past so that they can compete in the present against new outputs? Even used motor oil is recycled into lubricants that compete with newly produced varieties. Although recycling isn\u2019t costless, it nevertheless supplies the market today with outputs that depress new production.<\/p>\n If protectionist logic is correct, the past is guilty of unfair competition that harms workers in factories making automobiles, batteries, lightbulbs, and other goods that are increasingly imported from the past.<\/p>\n President Trump and his advisors, along with protectionist pundits such as Oren Cass, assure us that one key to making the American economy great is protecting American workers from low-priced imports.\u00a0<\/p>\n We economists are convinced that they\u2019re deeply mistaken. But if we are wrong and they are right, they have so far failed to protect American workers from a source of imports much larger and more formidable than foreign countries: the past and the many goods that it routinely exports to us at low prices. <\/p>\n \u2014<\/p>\n [1]<\/sup> The average price of a used car sold in the US in 2024 was $27,177<\/a>. Multiplying this figure by 37.4 million units sold yields total expenditure on used cars in the US in 2024 of $1,016,419,800,000.<\/p>\n [2]<\/sup> The median (I can\u2019t find the average) price of an existing home that sold in the US in 2024 was $407,500<\/a>. Multiplying this number by the number of such homes sold in 2024 \u2013 4.06 million \u2013 yields $1.165 trillion.[<\/sup><\/p>\n 3]<\/sup> The average price of a new home sold in 2024 was $512,200<\/a>. Multiplying this number by the number of such homes sold in 2024 \u2013 683,000 \u2013 yields a figure of $349.8 billion.<\/p>\n The post Tariffs Are Missing the Real Enemy: Yesterday\u2019s Products<\/a> was first published by the American Institute for Economic Research (AIER)<\/a>, and is republished here with permission. Please support their efforts.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Are President Trump\u2019s tariffs proving that two and a half centuries of economic analysis exaggerated the virtues of free trade? 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