Missouri Senate Candidate Austin Petersen Slams Tariffs, Encourages Free-Market Economics
Written by Frank Camp |
President Trump’s tariffs, specifically on steel and aluminum, have caused quite a stir among world leaders, as well as politicians and pundits within the United States. Many conservatives oppose the tariffs, while the president’s most ardent supporters have argued that such actions are necessary.
On Thursday, I spoke with Missouri Republican Senate candidate Austin Petersen about the president's tariffs, trade wars, and economic literacy. Petersen is well known for his staunch support of free markets and free trade, and he didn’t hold back during our exchange.
DW: President Trump has placed tariffs on steel (25%), aluminum (10%). How will these tariffs play out?
PETERSEN: Well, a tariff is a tax, and I’m always going to be trying to get rid of taxes, not increase taxes. My number one concern, of course, is for Missouri industry and job creation. Agriculture is our top industry; we supply about $88 billion per year in economic benefits to the state through our agriculture industry, and unfortunately, I think what’s going to happen is farmers are going to get hit on both sides of the tariff – because they make a lot of purchases of high-end metal, like grain bins, and combines. We’re also going to get hit on our pork production, right? We exported about $328,000 of pork products, I believe, in 2016, and we’re going to have a 25% tariff on U.S. pork. That’s going to hurt us a lot.
It’s a mistake to cut taxes like we did last year, and then raise them this year through the tariff process. It’s gonna hurt Missouri farmers, and my number one interest is to protect the interests of Missouri industry.
DW: There was an article from Evan Horowitz of FiveThirtyEight that essentially said that tariffs can work if there’s a "well-defined goal, and a winning strategy." Harley Davidson was cited as an example. In the 1980’s Reagan slapped a hefty tariff on imported motorcycles to aid Harley Davidson, which was allegedly on the brink of bankruptcy.
According to Horowitz, the "tariff started at a steep 49.4 percent before gradually falling back to the normal 4.4 percent rate over the course five years. In the end, it didn’t take that long for Harley Davidson to reorganize its operations, fix manufacturing problems and return to profitability."
Some would call this a "good" tariff. What would you say to that?
PETERSEN: I would say that’s a bald-faced lie because the only people who benefit from tariffs are the cronyists or the corporatists who get the pay out – the two big to fail corporations.
Unfortunately, I think that the people are being bamboozled on the tariff issue. It was the Smoot-Hawley tariff that exacerbated the Great Depression in the United States. I think foreign trade fell by more than half. Never trust a politician name Smoot or Hawley, in my opinion [a dig at his primary opponent, Josh Hawley].
Of course, while we’re talking about Josh Hawley, he kowtowed; his interests were in bending the knee. As soon as the tariffs came out, he came out in support of those tariffs. That is not a fiscally conservative position; it’s not one that’s in the best interest of the people of Missouri. I think that in the long-term, raising taxes does nothing but harm the poor and middle-class, who have to pay higher costs for goods and services to perform the same job.
DW: Some are saying that the imported steel from China and elsewhere is of a lower quality than U.S. steel. This is being used as a justification for the 25% tariff on steel. What’s your response to that?
PETERSEN: Yeah, I always love it when people tell me what’s good for me and what’s not, and when people tell me what I can or can’t have. The whole mindset, of course, is paternalistic.
Let the companies who buy the steel make the decision about what quality of steel they want, and let the market decide which products are superior. This is basic economics. This is standard, conservative, free market economics. There are no true conservative economists who agree with trade wars or tariffs being in a country’s long-term economic interest.
So no, I don’t agree with that. I think it relies on fallacious economic illiteracy, and it needs to be stamped out.
DW: If other countries are imposing tariffs on certain products, is there any merit in retaliating with tariffs of our own?
PETERSEN: So they’re punishing their own citizens by raising taxes on their own people, making it difficult for their own people to compete in a system of international trade, and we’re supposed to respond in kind? I’m actually reminded on Donald Trump’s chief economic advisor, Larry Kudlow, who once wrote that tariffs are something that we do to ourselves in times of peace that our enemy does to us in times of war. So no, I don’t think that we should fight communism with communism; I think you fight communism with free market economics.
DW: So you would say the notion of needing to "fix the trade deficit" is nonsense?
PETERSEN: It is total nonsense. I have a trade deficit with McDonald’s. I buy a double quarter-pounder with cheese, a medium fries, and a large Coke. Do I need to start manufacturing cheeseburgers and fries and Coke to close my trade deficit with McDonald’s? Mutual trade involves mutual benefit, or it doesn’t happen.
People decide what they want to buy based on myriad economic factors. Every major conservative economist understands that value in the marketplace is not derived from labor, it’s not even necessarily derived from the quality of the materials, it’s derived from what one person decides to pay for something at the time.
People need to read Henry Hazlitt’s "Economics in One Lesson"; they need to read Frédéric Bastiat’s "The Candlemakers’s Petition"; they need to go to the Foundation for Economic Education (FEE) and read about tariffs. The loathsome and fearful tariffs the United States has engaged in have done nothing but isolate us in the wold, and restricted us from building the kind of prosperity the United States is capable of, and quite frankly deserves. I’m sick and tired of the policy makers and the central planners in Washington telling us what quality of iron or steel we have a right to purchase. It’s none of their business.
DW: You look back at people like Milton Friedman, and his response at a Q&A in 1978 regarding tariffs on steel, and it makes so much sense. Fast-forward to today’s Republican Party, and it seems as though people have simply forgotten.
PETERSEN: I go to a lot of Republican events around the state, and sometimes free trade comes up. You know what I like to do? I say, "Raise your hand if you shop at Walmart." And the majority of the people there shop at Walmart. I shop at Walmart, too. And then I say, "Okay, now raise your hand if you’ve ever felt victimized by the low, low prices that you get at Walmart?" And, of course, no one raises their hand because they’ve all benefited from it.
We all benefit from a system of free trade, and if someone else from another country is raising taxes on their own people to be able to buy American goods, let them. Let them throw rocks in their harbor – but we don’t need to respond by throwing rocks in our harbor. That’s not how we build a strong, global system of international free trade. It’s a shame that the Party of Ronald Reagan has so forgotten that one of the key aspects of his legacy was free trade.
DW: Finally, I wanted to open up the floor. Is there anything about this issue that hasn’t been covered that you want to speak about?
PETERSEN: Yeah, just one last thing. We don’t want to wipe out the gains that we’ve gotten from the tax cut that was passed last year. With the billions of dollars of tariffs that are being threatened and enacted against us from even our allies, we’re going to get caught up in a trade war from which no one will benefit.
We need to go back to Mises, Bastiat, Hayek, and Hazlitt, and I would highly encourage any readers who are genuinely curious to start with "Economics in One Lesson" by Henry Hazlitt. That will start you on the path to economic literacy on the issue of free trade and how it benefits the poor and middle-class in the United States.
I’d like to thank Missouri Senate candidate Austin Petersen for taking the time to speak on this issue. You can check out The Daily Wire’s previous interviews with Petersen here (three parts, covering a wide range of topics), here (Second Amendment and school shootings), and here (Response to latest poll showing him beating Republican primary opponent Josh Hawley, as well as Democratic opponent Claire McCaskill).