Trump’s Tariffs Fail the Tests of Stewardship and Justice

Economists generally don’t like tariffs. This was true even before the latest round of tariffs implemented by President Donald Trump. Various surveys have found that around 90 percent of economists believe that tariffs will negatively impact economic welfare, and a similar amount believe that tariffs lead to inflation.¹ This is a high degree of agreement for a profession that is famous for internal disagreement. As an economist and a Christian, I stand firmly within the consensus of the profession.

It is important to understand why economists believe that free trade rather than protectionism leads to greater economic well-being. One of the field’s key principles is that of comparative advantage. If you have ever taken an economics course, you might remember it.² Comparative advantage suggests that when two people or two countries specialize in the production of goods where they have relatively lower costs and then trade with each other, both parties will benefit. The history of international trade provides strong evidence for the mutual benefits from trade, and the win-win outcome goes against a zero-sum approach that some take toward trade. Tariffs get in the way of free trade, and both parties end up losing.

While free and voluntary trade between individuals and countries should almost always lead to welfare gains, economists are wise enough to realize that the complicated nature of international relations can add complexity to the conclusions we draw from our models. On occasion, countries can engage in “economic warfare” by dumping goods into a vulnerable market at below-market prices. Nations may also produce goods by exploiting workers or the environment or by providing substantial government subsidies which cause unfair competition. In these cases, some targeted tariffs might be justified.

In addition, when countries engage in free trade, workers in some industries can be negatively affected. For example, if more automobiles are imported from foreign countries into the USA, some domestic auto workers might lose their jobs. When US companies export products to other nations, this can displace employment in those countries. These displaced workers need help to find new and worthwhile employment. However, overall, the principle of comparative advantage still holds. Those countries that have engaged more in voluntary trade have grown more over time, and their population generally enjoys a much higher standard of living. While free trade isn’t perfect, economists will tell you that free trade has helped to bring billions of people out of poverty.

What additional insights can Christian economists bring to the question of free trade and tariffs, particularly the new tariffs announced by President Trump? For Christian economists, any economic policies need to be evaluated in light of the biblical notions of stewardship and justice. President Trump’s tariffs clearly fail the tests of these two important principles.

Our responsibility to be good stewards requires us to wisely use all the resources that God has provided us. While we do that, we are called to ensure that our economic activity benefits others as well as ourselves. One of the beautiful things about voluntary free trade is that we can provide a good or service that helps others, and in return, we receive something beneficial from someone else. Free trade is different than charity, and it has incredible results. Think of all the products from around the world that you have purchased that have made your life better. We can also remember the products our country has produced that have been exported to foreign customers who need just this very product (medicines or technology, for example). Placing substantial restrictions on trade limits our ability to be good stewards; almost everyone will be made worse off economically.

Good stewardship also involves prudently counting the costs and benefits of our economic actions. Even if President Trump’s tariffs would save some domestic jobs, this would come at a very high cost. Research by economists suggests that each job saved by tariffs could cost US residents more than a quarter of a million dollars.³ The fluctuating nature of the president’s tariff proposals also brings a high degree of uncertainty into economic decision-making. It is difficult to be a good steward of one’s resources when the “rules of the game” make little sense or change frequently. Uncertainty is an enemy of economic growth. Given an uncertain environment, both businesses and consumers are less likely to invest and spend.

President Trump’s tariffs will also cause significant injustice both in the USA and the rest of the world. By their very design, tariffs raise the prices of imported goods to the United States. At the same time, domestic producers no longer feel the competitive pressure to keep their prices down. I have written here before about how “inflation is the enemy of justice,”⁴ and these tariffs will absolutely lead to inflation here in the United States. It will start to happen very soon. We know that the poor are those most affected by inflation, and their lives will soon become more difficult. Of course, the impact of our tariffs extends beyond the United States to workers and businesses worldwide. As we here in the US consume fewer foreign goods, workers abroad will begin to lose their jobs. When foreign countries impose retaliatory tariffs, individuals there also experience inflation. Restrictions on trade almost always have the greatest impact on the poor.

The Bible includes many direct commandments on trade and exchange. For example, Proverbs 11 and Leviticus 19 address the issue of fairness in trade, emphasizing honest scales and accurate weights. While not directly addressing the issue of tariffs, overall, the Biblical message emphasizes that our economic activity can be a substantial way to love our neighbor as ourselves while prioritizing the needs of the less fortunate.

We even read in Deuteronomy 2 of a surprising example of how trade happened between less-than-friendly nations. When the Israelites approached the promised land, they journeyed through the land of Edom, where the descendants of Esau lived. God commands Moses to tell his people, “Do not provoke them to war, for I will not give you any of their land, not even enough to put your foot on. I have given Esau the hill country of Seir as his own. You are to pay them in silver for the food you eat and the water you drink” [Deut. 2:5-6 NIV]. While Edom was suspicious of the Israelites, the process of fair trade in some way “turned down the temperature” between the two nations, and the Israelites passed through peacefully. While President Trump appears to believe that bluster and brute force will improve our situation with other nations, the economic history of many millennia shows instead that cooperation is the way to generate better, longer-lasting economic outcomes.

Whenever I evaluate an economic policy proposal, I try to fully understand the intention of its proponents. President Trump has stated that he decided to impose these tariffs because he thinks other countries are “taking advantage of us.”  In some cases, they certainly do. However, we still need a wise response. President Trump also believes that producing more products here in the USA will make us more prosperous. For example, he suggests that importing fewer cars and making more here in the USA would lead to more jobs in that industry. It might. However, he unfortunately forgets about the jobs that will be lost in US businesses that export goods when other countries place retaliatory tariffs on our products. In addition, President Trump sees tariffs as a substantial revenue source for the government. He has stated that foreign countries will pay the tariffs and add trillions of dollars to the US Treasury. Economic analysis and research suggest instead that US consumers and businesses will ultimately end up paying most of the costs through higher prices.⁵

There are nuances about tariffs and whether they are appropriate in certain situations. In some cases, one could imagine that a carefully designed tariff could advance stewardship and justice. The tariffs imposed by President Trump are completely different. They are punitive, incredibly excessive, and will negatively impact the economic welfare of the vast majority of our country’s population. These tariffs will harm us, not only now, but into the future. They will also increase poverty worldwide and make it harder for the United States to promote justice.

This action is also a real missed opportunity for the Trump administration. With control over the executive and legislative branches, the time was ripe for new economic policies that promoted stewardship and justice and improved government efficiency. Instead, we are getting what looks to be an economic disaster; this economic policy decision could be the worst one made in our lifetimes.

Frankly, there is much more to say about how the Trump tariffs fail to meet the tests of stewardship and justice. Given the palpable negative consequences that are already besetting us, it is difficult to see how such a trade war as initiated by President Trump could persist for a long time. The president is known for changing his mind frequently, but he is also known for being stubborn. Christians need to pray, peacefully protest, and contact our political representatives.

1. As just one example, see https://siepr.stanford.edu/publications/policy-brief/framing-next-four-years-tariffs-tax-cuts-and-other-uncertainties-trump.
2. A quick review of the concept can be found at: https://www.library.hbs.edu/working-knowledge/an-economic-principle-for-us-all-comparative-advantage.
3. For example, see https://www.piie.com/blogs/trade-and-investment-policy-watch/high-taxpayer-cost-saving-us-jobs-through-made-america.
4. Todd P. Steen, “Inflation is the Enemy of Justice,” https://christianscholars.com/inflation-is-the-enemy-of-justice/.
5. See https://news.uchicago.edu/story/how-do-tariffs-work-and-who-will-they-impact-uchicago-experts-explain.