Why Tariffs Promote Free Trade Across the Globe, and Do So Peacefully

I believe in free trade and that a free and virtuous society is the one that will allow for the greatest flourishing of people in all ways, including but not limited to economic measures.

Given, this, some might be surprised that I am going to present an argument for the judicious use of tariffs in the international marketplace. My argument is not one that says they are an occasional and necessary evil. I say that when applied judiciously, they actually promote free markets around the globe.

I am aware that this runs against commonly held view of exponents of free trade on tariffs. Put simply this is they are always bad because they represent, in effect, a tax on the consumers of the country that applies them. So, according to this logic, when the US charges tariffs on imported goods from China, those costs are passed on to the consumer in the US and Chinese goods become more expensive.

Most of those who support Trumps application of tariffs against China, might concede this point, but justify their use as a temporary negotiating ploy that will punish China. Trump is gambling, they say, that although this hurts both parties, it will hurt China more than the US and that in a battle of nerves, China will break first. Then, it is hoped, China will come back to the table willing to negotiate a new and better free-trade agreement. My feeling is that this might happen, but pride can be huge barrier and bucketfuls of pride will have to be swallowed by the Chinese before this can happen. So while possible, it is also possible that China will never relent.

My argument in favor of tarrifs comes at this from a different direction altogether. It rests on an understanding that the nation is a natural society for man, in the same way that the family is. What I mean by this is that just as everyone is born into a family, so all are born into a nation. While people can change nations once they are in a position to make a choice (provided the new nation is happy to have him) he cannot be nationless, unless he permanently dissociates from all others. He has to be somewhere and the place that he chooses will be the one with the society that shares his values and beliefs at least partially.

The arguments that the nation is natural to man are both scriptural and philosophical. First, the bible consistently refers to the nations of the world, and follows the story of the Isrealite nation. For a philosophical, natural -aw argument I would refer readers to Roger Scruton’s book, How to Be a Conservative.

If we accept this premise, then it says that in order to establish themselves as players in the global markets, those who trade need to be part of a greater society which governs itself and the sets the rules and abides by the myriad of voluntary customs by which its members engage with each other. While people can in theory remove themselves from this scenario, they will tend not to. They need others in order to operate and it is this naturally binds nations together.

Furthermore, attempts to bind nations together unnaturally, which is what I would say is happening in the EU, are inherently unstable and cannot be maintained for long unless one nation forces others to cooperate. The EU, under this scenario, is headed to be either a totalitarian empire or to fracture.

Similarly, a picture of global trade that does not recognise the existence of nations as players is inherently flawed and will lead to unjustice. The nation state acts to temper the over dominance of international corporate interests that will destroy personal freedom.

When we interract with people accross the globe we always do so simultaneously a person, as a member of family and as member of a nation. In principle these associations can work in harmony with each other and for the good of all nations, (but given human nature, will generally do so by degrees without destroying the positive effects totally). The natural way of interracting trade relations across the globe therefore, is between nations. Generally speaking, when an American person trades with a Chinese person they way in which they do so is set by nations they represent.

The greatest barrier to international free trade, therefore, is bad actors - nations that won’t play to the rules. The question then is how can you deal with bad actors?

One answer would be to seek to create a body that can arbitrate and rule over the nations. The United Nations or the international courts might be seen as such authorities, but in practice they are either toothless or dominated by those with power and which ineveitably leads to greater injustice and corruption than if it didn’t exist at all. The existence of a supranational authority cannot be justified philosophically in the same way that a nation can and however much people might desire an authority they can trust to bring bad actors into line, the effect of its existence will not be good. There is only one authority who is greater that the nation, and that is God. The United States is one nation ‘under God’, but it is not only one.

Another answer, used many times in the past, is to use force - one nation can invade another. This, as we know rarely benefits either party.

And this brings us to a second alternative. The Trump solution: punish the bad actor with tariffs, one nation dealing with another bilaterally. I suggest the effect in the short term might be detrimental in the way that the free-market people suggest, but in the long term it is likely to redirect trade. If there is a multiplicity of nations then people will redirect their trade to other nations that do not cost so much to do business with. The net effect might not be so great as if all parties were faithfully following the principles of free trade, but it can be better than if nothing was done. I wonder if this explains why Trump’s tariffs don’t seem to have penalized the home consumer and home industry as much as many predicted. This might mean that the tarrifs against China might never be lifted, and that this won’t necessarily be such a bad thing and it might even be just. The desire for justice should not be underestimated as a motivation for behaviour. It’s not all economics!

When there are many countries to do business with, and the possibility of moving trade to them, it motivates nations to be good actors. When China knows that it might lose business permanently because there are alternatives, they are less likely to break the rules unilaterally in the future. The ideal of global free trade is unlikely ever to be achieved, I suggest, as there will always be bad actors. But if there are many nations acting as players on the global stage. People within one nation will always preferentially work with those from nations that play fair.

What is a nation? It is a society bound by a common set of values, ideals and culture. Culture is so important because a culture that is beautiful tells us that we are at home in the world. There is room for a multiplicity of nations, and there is a room for a multiplicity of cultures in the world. Diversity of nations is a good thing. This is not an argument for an imposed uniformity within nations or cultures , but it does say that people should be free to move to that place where they feel at home provided that the people who are already there are happy to have them.

Neither is this an argument for intolerance or repression of dissenters - free speech and freedom are key values in a free society and will shape its culture. It simply says that generally, the way in which that those values are expressed will characterize a good nation, and there is room for many good nations in the world.

Nations, on the whole, form naturally. One might consider that the Founding Fathers of US didn’t so much impose a set of values on a society to create it out of nothing. Rather, the success of the US experiment rests in the fact that they articulated well the values already present in this nation-in-the-making, and those values were good.

In many ways the Brexit events of the last two years highlight this principle at work. I do not see the EU as a nation and so would like to see Britain leaving so that it is a nation free to live by its values; and free to form bilateral trade agreements with every other nation, including others in Europe and of course the United States.

But by the same argument, should Scotland have independence from the United Kingdom. My personal feeling is that if the Scottish people really do see themselves as a nation, then they should be independent and the world would be better for it. However, I do not think, that when it comes down to it, that this is what the majority of Scots want. Sadly they seem to see themselves, under the leadership of the socialist Scottish Nationalist Party, as a country that can only be a client state of another. They are not by nature a nation at this point, rather they are a dependent provice of any other country that will pay for their extravagant social security system. The only question in their minds is: do they wish to be parasitical upon England, or parasitical upon Germany as part of the EU? This is a sad state of affairs. Judging from its history it could be one of the most properous nations on earth, another Singapore or Hong Kong; but only if it is prepared to adopt the values of a Judeo-Christian society and personal freedom (which socialism does not allow for) and become a nation under God! I don’t see that happening.

If there were a referendum of all Brits on the matter today, I would (unlike the majority of Scots, it seems) vote for independence.