Critics insist that the tariffs are not so good for the American economy as a whole, however. After all, what becomes of the American businesses that depend on steel? Now their costs will rise, and those costs will either be passed on to consumers or, should the rise be more than consumer demand can bear, they will cause businesses to contract, even to close. It sounds like a dire scenario, but when prices rise in other circumstances, economists have no problem explaining that substitute goods will be found or, at most, “creative destruction” will take place. Firms and prices, the market as a whole, will adjust. That will happen in the case of any disruptions caused by tariffs, too. And there is this to keep in mind as well: if the complaint is that tariffs somehow distort the delicate mechanism of the market, unleashing an evil categorically different from other kinds of ebbs and flow in costs, then what must one say about the mutilations of the market that come from China’s industrial subsidies? In concrete terms, companies that are dependent on an artificially low price for steel are in for a world of hurt in the long run—for what happens when China fulfills its goals and stops subsidizing the price? Then the businesses that depend on the cheap steel market will be in the same position as they are with Trump’s tariffs, only worse.
China’s long-term goal in this will be very familiar to anyone who has studied the history of trade, war, and imperialism. Beijing would like to build up its own industrial power and hollow out that of the United States, its chief long-run strategic rival. Under imperialism, the metropole liked to foster and protect industry at home and keep colonies dependent by depriving them of manufacturing and getting them to import finished goods rather than creating them (let alone exporting them). Leverage belongs to the manufacturers. China has no need to start a war with the United States. One superpower can replace another by a gradual process of economic eclipse and induced de-industrialization. Let Americans think that their “service economy” will sustain itself. It won’t: a nation without a strong manufacturing base is as vulnerable as a nation that cannot feed itself or supply its own vital natural resources.