Tariffs: The Milton Friedman Perspective

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Tariffs are controversial. Milton Friedman expertly laid out the reason tariffs harm consumers in a lecture he gave in Utah in 1978. He was correct about the effects of tariffs in a perfect world, but when fighting a trade manipulator such as China, there are other aspects of the issue to be considered. There is a solid case to be made on both sides depending on whose ox is being gored. It is important to take a broad view of both sides of the trade debate.

The WSJ quotes Friedman:

Economist Milton Friedman in a 1978 lecture at Utah State University:

Let us suppose, for a moment, that the Japanese flood us with steel. That will reduce employment in the American steel industry, no doubt. However, it will increase employment elsewhere in America. We will pay for that steel with dollars pieces of paper. And if they were willing to send us steel, and just take back green pieces of paper, I can’t imagine a better deal!