Donald Trump on Thursday urged companies that do not want to pay rising tariffs to move production into the United States.
Billions of Dollars are pouring into the coffers of the U.S.A. because of the Tariffs being charged to China, and there is a long way to go. If companies don’t want to pay Tariffs, build in the U.S.A. Otherwise, lets just make our Country richer than ever before!
— Donald J. Trump (@realDonaldTrump) November 29, 2018
Trump’s remarks make it clear that his trade policy does not resemble the “protectionism” often maligned by economists. Critics often describe protectionist tariffs as protecting U.S. companies from international competition. Indeed, much of the gains economists expect from trade arise in their theoretical models from competition.
But Trump’s tariffs do not reduce competition. Indeed, they increase competition for labor in the U.S. by incentivizing companies to locate production of goods here. Domestic companies still have to compete with foreign rivals but this takes place while both employ U.S. workers.