Free Trade

Eric Boehm | 9.27.2024 1:45 PM

If you happen to be in need of a new toaster, you could pop over to Home Depot later today and pick one up for less than $30—or less than $50 if you're looking for a fancier design or the ability to brown more than two slices of bread at once.

That's great. Cheap, abundant kitchen appliances are one of the truly wonderful things about modern America, and they are possible because we can take advantage of global trade and the efficiencies made possible by outsourcing low-level manufacturing. As a result, most Americans can afford to replace their toaster without a second thought, since $30 is roughly the average wage for an hour of work right now.

Writing in The Atlantic, however, Oren Cass argues that the country would be better off if those markets were a little less efficient. What if a new toaster that was made in America costs $32 instead of $30 for a foreign-made one, he argues. Wouldn't that make workers better off?

He's wrong and that $32 toaster won't exist, but it's worth walking through the argument to see why.

Start with that $30 toaster made overseas. Now, slap a 10 percent tariff on it, so that consumers must pay $33 to buy it. That means the Treasury Department collects $3 in new revenue, but it also means that domestic toaster-makers can sell their wares for $32 and undercut the imported models.

If tariffs cause consumers to switch to those domestic-made toasters, Cass........

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