A Fifty-Percent Tariff and the Old Art of Robbing Peter Quietly

When a government announces a fifty‑percent duty on a wide range of imports from its nearest neighbour, it does not merely wave a flag; it alters a price. Hockey equipment and bottles of drink may appear trivial matters of fashion or conviviality, yet to raise their price by half is to command that resources, on both sides of the border, be withdrawn from the employments where they are most valued and driven into those where they are merely tolerated. In such measures the theatre is all noise and banners, but the substance is silent arithmetic: more dear goods, more wasteful industry, and a smaller real reward for the ordinary workman’s toil.

The visible countenance of this policy is bold defence of domestic producers; its invisible profile is a tax upon domestic consumers and foreign sellers alike. A brewer in Canada who once sold freely to a bar in Chicago now finds his casks obstructed; the bar keeps serving beer, but dearer or poorer, and its patrons must surrender a larger share of their wages for the same evening’s ease. In The Wealth of Nations I observed that many regulations of commerce sacrifice the consumer to the producer. Here that old mercantile trick is only rendered more conspicuous by the magnitude of the impost.

The mischief does not end with one proclamation. Canada has already replied to earlier duties with its own counter‑tariffs on steel, aluminium and vehicles; provincial authorities have halted the purchase and retailing of American alcohol. Each side pleads prior injury, each wraps its pleas in the language of fairness, and each in truth narrows the common market upon which both their opulence rests. The division of labour is limited by the extent of the market; to cut that market in two is to blunt the very instrument which has raised modern industry from the cottage to the continental network.

In a great integrated region, one country may excel in timber, another in spirits, a third in machinery; by exchanging their several surpluses, all three become richer than if each clumsily imitated the others. A fifty‑percent duty under an ancient statute, indifferent even to the obligations of a newer trade agreement, announces that this natural co‑operation shall be displaced by political bargaining. The higgling and bargaining of the market is thus over‑ruled by the higgling and bargaining of ministries, who treat the annual produce of the land and labour as a weapon rather than a fund for human subsistence and comfort.

Some will answer that such severity is necessary to punish what are called discriminatory measures by the neighbour, or to secure better terms in impending negotiations. This is the language by which every restraint upon trade has ever been justified: the fault lay with the foreigner, the necessity with the statesman, the cost with nobody in particular. Yet the impartial spectator, of whom I treated in The Theory of Moral Sentiments, would ask a simpler question: are these measures fitted to increase the real enjoyments of the great body of the people, or only to sustain the dignity of governments and the profits of particular trades?

Nor should we be deceived by cries for “fair trade” issuing from the most protected quarters. People of the same trade, when consulted in such matters, have long shown a talent for converting their apprehensions into national alarms. To employ an obsolete legal weapon to bestow them a wall of fifty‑percent around their wares is not the correction of injustice but the consummation of a conspiracy against the public. Self‑interest, under equal rules of justice, commonly conducts each merchant, as if by an invisible hand, to promote the general good; self‑interest armed with political favour conducts him, with equal certainty, to promote the vile maxim of all for ourselves and nothing for other people.

The state has its proper duties: to defend the society, to administer justice, to erect public works which the private merchant cannot profitably maintain. To manage the detailed pattern of who shall buy hockey sticks or whiskey from whom is no part of that office. When rulers pretend that a tariff of fifty‑percent is an instrument of national greatness, rather than a blunt tax on their own labouring poor and their neighbours’ industry, they do not merely mistake an economic calculation; they practise upon the natural credulity that confounds the splendour of power with the wealth of a people. The smoke of this quarrel will clear; the diminished real wages it leaves behind will remain stubbornly in view.