Editorial: Navarro proposal takes cronyism to a new level

Navarro’s comments implicitly acknowledge that tariffs hurt some businesses and could stall job creation. Otherwise why would manufacturers need to apply for relief from them? In fact, we’ve already seen this kind of market retardation happen in just the last several days: On Saturday, Swedish appliance maker Electrolux announced it was freezing its plans for a $250 million plant expansion in Tennessee. The company said the new tariffs will give foreign manufacturers “a cost advantage that is hard to compete against.” And the tariffs haven’t even gone into effect yet.

Leave aside the negative economic effects, though, and consider the political consequence of allowing companies to apply for exemptions to a tariff. Expect a frenzy of lobbying for special favors by corporations eager to prove their critical need for duty-free metals. This sort of rent-seeking has long been commonplace at the state and local level—think of the innumerable tax carve-outs and subsidies granted to specific companies by your local council and state legislature. Granted, the feds have been guilty of this sort of thing, too (remember Solyndra?), but Washington isn’t the capital most corporations look to for special tax favors.

Until now.