November 21, 2019
Donald Trump went to Texas yesterday to take credit for the opening of an Apple plant that had been open for five years and is not actually an Apple plant. (It is a supplier than produces parts for Apple products.) While there, he indicated that he may exempt Apple products imported from China from the 25 percent tariffs he has imposed on Chinese imports more generally.
While the prospect of a seemingly politically motivated waiver did get some attention, it deserves much more. There are real economic arguments against tariffs. They unambiguously raise the cost of items subject to the tariff. Such costs have to be measured against the potential benefits, both as a weapon in a trade war and potentially as part of an economic development strategy.
However, one unambiguous negative of tariffs is the opportunity to exploit exemptions for political or personal advantage. (Tariffs generally allow exemptions, usually for items that cannot be obtained elsewhere.) It appears that this is exactly what Trump was doing with his trip to Texas.
Obviously Trump valued the photo-op, where he could boast about his economic accomplishments. If this can buy Apple an exemption from China’s tariffs it sends a powerful message to other companies about the benefits of showing support for Trump.
This use of government power to advance his political agenda is exactly what Trump did with respect to aid to Ukraine. This sort of abuse is a hugely important issue. As a practical matter, there are far more companies looking for exemptions from tariffs than there are countries in desperate need of aid from the United States.
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