These kinds of trade-offs in trade policy are by no means hypothetical. In fact, it’s possible to see a miniature version of them playing out right now. Earlier this year, the U.S. slapped tariffs as high as 266 percent on some forms of Chinese steel because of a U.S. government finding that the Chinese were “dumping” their products on the market — in other words, selling steel at unreasonably low prices, well below cost, in order to prop up the Chinese steel industry.
Steelmakers in the U.S. are thrilled but, as the Wall Street Journal reported in June, the tariffs are a “double-edged sword.” Companies that manufacture goods with imported steel say they will have to raise prices and one executive, from a firm that manufacturers school chalkboards, told the Journal that his company might have to shutter a factory because customers would be cutting back on orders.
That’s not an argument against such targeted tariffs, which arguably represent the kind of retaliatory and remedial action necessary to keep a free trade regime functioning. There’s a balance to be struck, between easing restrictions on trade and reinforcing the standards that matter. Even among relatively like-minded economists, there’s a vigorous debate about where exactly that balance should be.