Navarro’s Faith-Based Case for Tariffs

Ramesh Ponnuru

The president’s trade adviser recently made the case in the Wall Street Journal that the president’s tariffs have helped the economy. I’ll examine some of its claims in sequence. Excerpts from him are in italics.

Though the current economy is among the strongest of the past 50 years, critics of President Trump’s transformational trade policies continue to insist that the tariffs are hindering rather than helping the boom.

Of course an economy can be strong while also being hindered by misguided government policies. The administration itself takes the view that some government policies, which it would like to change, harm the economy.

Why have the gloom-and-doom forecasters been so wrong?

Navarro has at this point not identified any forecaster who has been wrong—and, spoiler alert, he won’t go on to identify one—although we can stipulate that anyone who thought that tariffs would by themselves stop a relatively strong economy from being relatively strong was indeed incorrect.

The economy has added more than seven million jobs during the Trump presidency, and more than 2.4 million Americans have risen out of poverty. 

This is all great news, but it merely restates the banal point he made earlier (we have had a strong economy and tariffs) without proving his distinct headline claim (tariffs have helped the economy).

This jarring disconnect between the forecasts and the real Trump economy would be comical if the policy stakes weren’t so high.

Again, identifying a mistakenly pessimistic forecast would not establish that the tariffs have been helpful; but Navarro hasn’t even done that in this op-ed.

What is sorely missing from these forecasts is a “general equilibrium” analysis of tariffs, which would assess the whole economy, with a concomitant “dynamic scoring” of their effects, to account for the new investment tariffs induce.

You might expect that Navarro is about to perform or cite such an analysis. He isn’t. Note also that his hypothetical analysis does not commit to accounting for any investment the tariffs prevent from happening.

Here’s an equally important consideration, this one regarding strategy: President Trump’s imposition of actual tariffs has made the threat of tariffs more credible, and a variety of Trump tariff threats have borne robust results. These include the successful renegotiation of two of the worst trade deals in U.S. history, the North American Free Trade Agreement and the deal struck with South Korea in 2007. The administration also forged a new pact with Japan that will boost American electronics along with farmers and ranchers.

At best this would establish that the long-term benefits from these deals were worth the short-term pain the tariffs inflicted on the economy, not that the tariffs had helped it. But they don’t establish even that. The new version of NAFTA is largely the same as the old one, with some modest changes that for the most part were either available to the U.S. without tariff threats or are likely to cause net economic harm (see here for more). The major change in our trade deal with South Korea was its expansion of the number of auto exports we are allowed; our carmakers weren’t hitting the old quota. And so on.

In addition to missing the upside of supporting American industries, critics overlook the ways the U.S. has suffered under open trade. Research by economists like MIT’s David Autor has illustrated the socioeconomic harm caused by expanded trade with China in the 2000s, which contributed to the loss of tens of thousands of American factories and millions of manufacturing jobs and the hollowing out of many Midwest and Southern communities.

There’s a lot to be said about this oft-misused research, but let’s again go back to the central claim Navarro is making. Autor has said that the “China shock” his colleagues and he analyzed is over. The existence of prior harms does not imply that tariffs today counteract those harms.

We have two hundred years of economic theory and decades of studies suggesting that tariffs usually and on balance impose economic harms on countries that impose them. As Navarro implicitly concedes, every analysis of the effect of Trump’s tariffs has found them to impose net harms on the U.S. economy too. Against the weight of that consensus we have Navarro’s unsupported speculation that a more complete analysis would up-end it. How much weight should we put on his view? It seems relevant that Navarro has repeatedly shown that he does not understand how national income is calculated.

Our economy is strong, and it should help the president’s reelection bid. There is no reason to doubt, however, that its strength has come in spite of Trump’s tariffs rather than because of them.

More from National Review

  • Schiff proposes postelection 9/11-style commission to study coronavirus response
    Yahoo News

    Schiff proposes postelection 9/11-style commission to study coronavirus response

    Rep. Adam Schiff's proposal for a 9/11-style commission to study the nation's response to the coronavirus outbreak would give the president the power to appoint the chairman, and would not begin its work until after the 2020 election in November. Schiff, the chairman of the House Intelligence Committee, was the central Democratic figure in the impeachment trial of President Trump in January, serving as the prosecutor. As a result, his political profile has greatly increased but has also become much more sharply partisan.

  • As coronavirus ravages Spain, doctors get a grim order on 'futility of care' for the very old and very sick
    Yahoo News

    As coronavirus ravages Spain, doctors get a grim order on 'futility of care' for the very old and very sick

    On Thursday, a gray and gloomy day in Barcelona — normally sunny and festive this time of year — residents awoke to unsettling news. According to regional newspaper LaVanguardia and other sources, a document circulated by the health department of Catalonia — the northeast region of Spain that has Barcelona as its capital — recommends that emergency teams and health care workers stop using ventilators for patients older than 80, and further recommends that extremely ill victims of COVID-19 be allowed to die at home rather than being taken to the hospital.

  • Revealed: food bank shortages expected to hit Washington state by mid-April
    The Guardian

    Revealed: food bank shortages expected to hit Washington state by mid-April

    Agencies and organisations tasked with feeding children, the poor and the elderly in Washington state during the coronavirus crisis will experience shortages of food and supplies as early as mid-April, according to state government emergency planning documents obtained by the Guardian. A 27 March situation report (SitRep) document produced by the Unified Command of Washington's State Emergency Operations Center (SEOC) projects that a combination of acute demand at food banks and schools, supply problems for food and cleaning supplies, plus staffing shortages, will mean government and NGOs will struggle to provide for hungry people whose incomes have disappeared as the state's economy stutters. This raises the prospect of food bank shortages in Washington but also nationwide, as food banks across the US are being increasingly utilized by unprecedented numbers of people in an economy that has been abruptly slowed to fight the spreading pandemic.

  • Report: Federal Agency Shipped Face Masks Overseas as Veterans Affairs Hospital Rationed Them
    National Review

    Report: Federal Agency Shipped Face Masks Overseas as Veterans Affairs Hospital Rationed Them

    A federal agency reportedly shipped face masks overseas from a Miami warehouse even as a nearby Veterans Affairs hospital was rationing them due to the coronavirus outbreak. The United States Agency for International Development (USAID) had a warehouse of face masks sitting unused in Miami while a Veterans Affairs hospital in the city was telling its health care workers to use the same face mask for an entire week, Fox News reported. Later, USAID exported the masks overseas.

  • Fact check: No, coronavirus did not lower the death rate in Chicago
    USA TODAY

    Fact check: No, coronavirus did not lower the death rate in Chicago

    It's a debate of particular significance to cities like Chicago, which has experienced high levels of violent crime. As of April 1, the virus has sickened over 3,000 people in Chicago and killed 39 — even as Illinois officials attempt to contain the spread through a stay-at-home order. "In Chicago, Covid-19 actually LOWERED the death rate," the post stated, over a background of laughing emojis.

  • As COVID-19 deaths steady, Italy's health minister eyes next phase
    Reuters

    As COVID-19 deaths steady, Italy's health minister eyes next phase

    Italy's health minister outlined plans on Sunday for broader testing and beefed-up health services as part of a package of measures that would follow a future easing of the country's coronavirus lockdown. Roberto Speranza said it was too early to say when Italy would be able to lift the measures imposed across the country on March 9, when it became the first country in Europe to impose a general lockdown to slow the spread of the virus. With more than 15,000 dead, Italy has the world's highest death toll from disease, accounting on its own for almost a quarter of all deaths globally.

  • Navy removes captain for raising alarm about coronavirus outbreak on ship
    Yahoo News Video

    Navy removes captain for raising alarm about coronavirus outbreak on ship

    The U.S. Navy on Thursday removed the captain of the aircraft carrier USS Theodore Roosevelt, who wrote a scathing letter to Navy leadership asking for stronger measures to control a coronavirus outbreak onboard.

  • 27 Best Home Office Decor Ideas to Keep You in the Zone
    Architectural Digest

    27 Best Home Office Decor Ideas to Keep You in the Zone

    Work from home and keep your sanity with these decor ideas that will help Originally Appeared on Architectural Digest

  • North Korea's official coronavirus count: Zero. Why that claim is hard to believe
    LA Times

    North Korea's official coronavirus count: Zero. Why that claim is hard to believe

    If the country is to be believed, North Korea is one of maybe a dozen nations not yet invaded by a deadly virus that has spread across the globe from remote islands in the South Pacific to outposts nestled high in the Pyrenees or the Greater Himalayas. China, its erstwhile backer and most important trading partner, has more than 80,000. As recently as this week, a state health official rebuffed suspicions that the country was being less than forthcoming about its coronavirus situation, telling foreign reporters in Pyongyang that not a single person had come down with COVID-19 thus far.

  • Sideshow Don: Trump pursues a non-virus agenda
    Politico

    Sideshow Don: Trump pursues a non-virus agenda

    When President Donald Trump exacted revenge Friday night by ousting the chief watchdog for the intelligence community, it was just one more instance of the president's addiction to sideshows -- in this case, closing out a personal vendetta in the middle of a global pandemic that has already claimed more than 8,000 American lives. White House officials and Trump advisers privately cast the firing of Michael Atkinson, the intelligence community's inspector general, as a move the president has plotted since the Senate acquitted him in February on two articles of impeachment.

  • Boris Johnson's pregnant fiancee Carrie Symonds suffers coronavirus symptoms
    The Telegraph

    Boris Johnson's pregnant fiancee Carrie Symonds suffers coronavirus symptoms

    Boris Johnson's pregnant fiancee Carrie Symonds has revealed she has "spent the past week in bed" after suffering coronavirus symptoms but is now recovering. Shortly after his announcement, Ms Symonds - who usually lives with the Prime Minister in the Number 11 flat - shared a photograph of herself self-isolating in Camberwell, south London, with the couple's dog Dilyn. While pregnant women do not appear more likely to contract coronavirus than the general population, pregnancy itself alters the body's immune system and response to viral infections in general.

  • Drive-by blessings in virus-hit Philippines
    AFP

    Drive-by blessings in virus-hit Philippines

    Priests delivered blessings from the back of trucks and motorised tricycles in the Philippine Sunday, adapting the deeply Catholic nation's traditions to the battle against the coronavirus pandemic. Locals lined up in front of their homes in a district of Manila, which is entering its fourth week of a lockdown that has brought the frenetic metropolis nearly to a halt. The priests made signs of the cross as they rolled past waving residents marking Palm Sunday, the start of the week that culminates with the observance of Easter.

  • 'We're nesting. We prepared his room': Families adopting children from China anxiously wait
    NBC News

    'We're nesting. We prepared his room': Families adopting children from China anxiously wait

    Rachel Pankratz and her husband had tickets in hand and hotels booked and were ready to travel to China on Feb. 14 to finalize their adoption of a 9-year-old girl. Working with adoption agency Chinese Children Adoption International, the Houston couple were told that as coronavirus cases increased, it was unlikely that they would be able to go. As China and other countries temporarily close their borders to international travelers to contain the coronavirus pandemic and as the State Department has issued a Global Level 4: Do Not Travel Health Advisory urging Americans to avoid all international travel, many families in the process of adopting children internationally have had their plans disrupted for an unknown period of time.

  • New York Gov. Cuomo says he expects the peak of the coronavirus outbreak to hit in the 'seven-day' range as cases skyrocket
    Business Insider

    New York Gov. Cuomo says he expects the peak of the coronavirus outbreak to hit in the 'seven-day' range as cases skyrocket

    New York Gov. Cuomo said he expects the peak of coronavirus cases in the state to be in the "seven-day" range, though he said the state isn't yet prepared for the pressure on the healthcare system. A day after Cuomo said he was deploying the National Guard to gather up unused ventilators, he announced China is donating 1,000 ventilators to New York and they are set to arrive sometime Saturday. New York had its deadliest day yet — again — since the outbreak began on March 1, as the number of cases jumped with over 11,000 confirmed since yesterday.

  • Number of coronavirus intensive care patients in Italy drops for first time
    Reuters

    Number of coronavirus intensive care patients in Italy drops for first time

    Italy reported its lowest daily rise in COVID-19 deaths for nearly two weeks on Saturday and said the number of patients in intensive care had fallen for the first time. The Civil Protection department reported 681 deaths, bringing the total to 15,632 since the outbreak of the new coronavirus epidemic in northern Italy on Feb. 21. The total number of confirmed cases rose to 124,632 from 119,827 reported on Friday but for the first time, the number of patients in badly stretched intensive care units fell, with 3,994 patients being treated, down 74 from 4,068 on Friday.

  • Coronavirus: Germany and France accuse US of taking face masks as international tensions rise
    The Independent

    Coronavirus: Germany and France accuse US of taking face masks as international tensions rise

    Germany and France have accused the US of taking face masks already ordered by Europe as the coronavirus pandemic continued to cause rising international tensions. Politicians in Berlin and Paris both said America had been using unfair means to undermine their own attempts to secure personal protective equipment. A city leader in Paris, meanwhile, said unidentified Americans had paid excessive prices to secure Chinese-made masks that had already been ordered by France.

  • Fact check: Did the Obama administration deplete the federal stockpile of N95 masks?
    USA TODAY

    Fact check: Did the Obama administration deplete the federal stockpile of N95 masks?

    The claim: The Obama administration used and did not replenish the nation's emergency stockpile of medical supplies, including N95 masks As the novel coronavirus pandemic strains health care systems, questions around the U.S. government's response have circulated in the media and online. On March 26, The Daily Wire published an article centering on the Obama administration's role in using and allegedly failing to replenish the federal stockpile of N95 masks. The Obama administration significantly depleted the federal stockpile of N95 respirator masks to deal with the H1N1 influenza outbreak in 2009 and never rebuilt the stockpile despite calls to do so,” the piece begins.

  • Where will the bodies go? Morgues plan as virus grows
    Associated Press

    Where will the bodies go? Morgues plan as virus grows

    Med Alliance Group, a medical distributor in Illinois, is besieged by calls and emails from cities around the country. Each asks the same thing: Send more refrigerated trailers so that we can handle a situation we never could have imagined. With U.S. medical experts and even President Donald Trump now estimating the death toll from the coronavirus pandemic could reach 240,000 nationwide, the sheer practicalities of death — where to put the bodies — are worrying just about everyone as cities, hospitals and private medical groups clamor to secure additional storage.

  • Trump Orders VA to Stop Withholding Money from Veterans
    Military.com

    Trump Orders VA to Stop Withholding Money from Veterans

    In reaction to the national emergency caused by the novel coronavirus, President Donald Trump has directed the Department of Veterans Affairs (VA) to stop withholding payments or benefits from veterans who have a debt with the agency. In his April 2 news conference detailing the nation's response to the COVID-19 pandemic, Trump announced that he had directed VA Secretary Robert Wilkie to suspend collections from veterans. While the exact timeline and process of the debt suspension isn't known at this time, the VA's Debt Management Center (DMC) states on its website that it is currently offering temporary debt relief on a case-by-case basis.

  • Coronavirus: Australia launches criminal investigation into Ruby Princess
    BBC

    Coronavirus: Australia launches criminal investigation into Ruby Princess

    A criminal investigation has been launched in Australia into how cruise ship passengers were allowed to disembark in Sydney despite some exhibiting flu-like symptoms. More than 600 people on board the Ruby Princess later tested positive for coronavirus and 10 have since died. The ship remains off the coast with nearly 200 sick crew members on board.

  • Putin says Russia ready to cooperate on cutting oil production
    AFP

    Putin says Russia ready to cooperate on cutting oil production

    Russia is ready to cooperate with Saudi Arabia and the United States to cut oil production, President Vladimir Putin said Friday. Putin said Russia was willing to make agreements within the framework of the OPEC+ group and that "we are ready for cooperation with the United States of America on this issue," according to a statement published by the Kremlin. Oil prices have tumbled in recent weeks in the face of a drop in demand and global economic uncertainty over the new coronavirus pandemic.

  • Provincial Communist Party Officials Are Concealing Extent of Coronavirus Outbreak from Beijing, According to U.S. Intelligence
    National Review

    Provincial Communist Party Officials Are Concealing Extent of Coronavirus Outbreak from Beijing, According to U.S. Intelligence

    The U.S. intelligence community has concluded that the Chinese government does not know the full extent of the coronavirus outbreak within the country, the New York Times reported on Thursday. China's government has encountered difficulties collecting accurate data on the spread of the coronavirus because mid-level bureaucrats in Wuhan and elsewhere in China have been lying about the number of cases, current and former intelligence officials told the Times. Local administration officials in China fear that their superiors will punish and even fire them if they report high numbers of cases.

  • South Korea's return to normal interrupted by uptick in coronavirus cases
    NBC News

    South Korea's return to normal interrupted by uptick in coronavirus cases

    The other world, however, keeps its eye firmly on the slight daily uptick in the country's number of cases. Despite methods like early testing and digital tracing, South Korea is bracing itself for a second wave of infection. Despite efforts to protect children from being infected with the coronavirus, over 83 percent of South Korea's hagwons — cutthroat test prep centers for students — remain open.

  • Tokyo reports 143 new coronavirus cases, highest jump in one day: governor
    Reuters

    Tokyo reports 143 new coronavirus cases, highest jump in one day: governor

    Some 143 more cases of the novel coronavirus have been reported in Tokyo, the city's governor said on Sunday, with the highest daily jump bringing the number of cases in the Japanese capital to more than 1,000. Tokyo's metropolitan government has strongly urged people to stay at home as the city of nearly 14 million has seen an uptick in the number of cases in recent days. The number of cases with untraceable transmission routes had increased in recent days, Governor Yuriko Koike said in a livecast YouTube video on Sunday, adding it was worrying that there were a number of people who were infected at hospitals.

  • U.S. Stops Issuing Passports Except For 'Life-Or-Death' Emergencies
    Time

    U.S. Stops Issuing Passports Except For 'Life-Or-Death' Emergencies

    The U.S. State Department has stopped issuing passports due to the COVID-19 pandemic, with exceptions for people who have a “qualified life-or-death emergency.” In a statement published March 27, the State Department advised Americans to avoid all international travel due to the spread of COVID-19, unless someone is experiencing an emergency and needs to travel within 72 hours. Situations that qualify as “life-or-death emergencies” include serious illnesses, injuries or deaths among members of a person's immediate family that requires travel outside of the U.S., according to the statement.