For a contrary opinion, read “In Defense of Trump’s Tariffs.”
In recent months, the word “tariff” seems to be on everyone’s lips. Those in favor of tariffs insist that the survival of America necessitates huge trade restrictions. Those in favor of free trade, on the other hand, often hold that widespread tariffs will inevitably lead to recession or even the next depression, as global supply chains delink across the globe.
What has been largely missing in this debate is the discussion of the morality of trade and tariffs. Does there exist what we might call a Catholic vision of trade? Have the Magisterium and great Catholic thinkers over the centuries had much thought about these issues? And if so, does their wisdom apply to the present debate? The answer is a resounding yes.
Trade Is Good
Before we delve into the question of tariffs, we must begin with a prior interrogative: is global trade, in and of itself, moral? In its most basic terms, trade simply means the deliberate exchange of goods and services. Foreign trade is the deliberate exchange of goods and services between those in different countries. But is that morally acceptable? After all, shouldn’t we just keep our own stuff?
Some of the greatest minds in ecclesiastical history discussed these questions, and the common opinion of the Fathers and Doctors of the Church was that trade is not only good, not only necessary, but ordained by the Providence of God. St. Basil the Great (329-379) expresses this beautifully:
The sea is good in the eyes of God . . . because it brings together the most distant parts of the earth, and facilitates the inter-communication of mariners. By this means it gives us the boon of general information, supplies the merchant with his wealth, and easily provides for the necessities of life, allowing the rich to export their superfluities, and blessing the poor with the supply of what they lack (“On the Gathering of the Waters”).
The Church Fathers and Doctors—while adhering to the justice of private property—repeatedly recognized that the goods of the earth are God’s gift to all men. Further, they recognized that man’s necessities are not all contained within one single region or country. Thus, international trading was seen as necessary. St. Bonaventure, for instance, argued that international trade must be moral, because without trade, “many regions could not subsist” (quoted in Odd Langholm, Economics in the Medieval Schools, 1992). That’s quite a statement by Bonaventure: he is clearly professing that without trade, it will be impossible for humans to survive in some areas.
Bonaventure’s observation is part of the reason that trading has been repeatedly applauded. Saint Thomas Aquinas writes that trading, “in order to satisfy the needs of life . . . is commendable because it supplies a natural need” (ST, II-II, q. 77, art. 4). Blessed John Duns Scotus writes, “The merchant, who brings such commodities from the lands where they abound to the country where they are lacking . . . is doing business that is useful to the state” (“Utrum Poenitens Teneatur Restituere,” John Duns Scotus: Political and Economic Philosophy, trans. Allan Wolter).
Moreover, some of these saints considered international trade a wonderful way to evangelize—to “make disciples of all nations.” Indeed, it proved so. When we look at the influence of finding new trade routes, we can see that the Age of Discovery was also a new age of evangelization. This is a benefit of international trade rarely discussed. (This also explains one of the reasons why totalitarian governments seek to hamper or eliminate foreign trade: to stifle the potential influence of Christianity.)
It is important to note that trade has been considered especially vital to the poor. As Basil notes, those in poor countries vitally need goods that can be naturally produced only by trade. (We’ll come back to that point in a moment.) The common opinion of the Fathers such as Augustine and John Chrysostom is that the goods of the earth were given to all mankind, not just a select few.
Clearly, the repeated Catholic insight is that God designed a world in which international trade is good, necessary, and providential.
Restrictions of Good and Goods
Free trade—meaning trade unobstructed by governmental restrictions—is the natural condition of man. Though travel conditions, terrain, and other natural occurrences can limit man’s trading, trade restrictions refer to government-made constraints.
A tariff is an import tax on goods. Who pays the tax? The receiver of the goods. This is very important: the tariff is paid by the receiver—not by the exporting nation. Thus, it is incorrect to say that an American tariff has been assessed “on Finland”; rather, it should be stated that a tariff has been assessed on incoming Finnish goods. There is a world of difference between the two. Clearly, the consumer is one who ultimately pays the tariff. Who receives the tariff tax money? The federal government.
Many of those in favor of tariffs understand that the consumer pays but argue that this is a price worth paying so that American manufacturing is “protected.” However, there are significant immediate problems with this, which include—but are certainly not limited to—the following.
First, under a tariff, since American manufacturers are no longer subject to as much foreign competition, domestic prices rise almost immediately. This hurts American consumers. Second, although an aluminum tariff, for instance, might help raise the wages of someone in the aluminum industry, that same person suffers (along with everyone else) as a consumer, as the prices of many other goods are also tariffed. Third, some things cannot be grown or produced in America, which means that a tariff on those products benefits no one, but is suffered by all—but mostly by poor people on the margins. Fourth, the importing nations, especially the poorer nations, suffer terribly, as they are unable to efficiently sell their products in America.
What does the Church have to say about all this?
In recent times, the Magisterium has reaffirmed the observations of past saints in lamenting foreign trade barriers. Much of the Magisterium’s emphasis has been on what is termed “the universal destination of goods.”
For instance, Paul VI stated in 1967’s Populorum Progressio,
If the earth truly was created to provide man with the necessities of life and the tools for his own progress, it follows that every man has the right to glean what he needs from the earth. . . . All other rights, whatever they may be, including the rights of property and free trade, are to be subordinated to this principle.
In his 1987 encyclical, Sollicitudo Rei Socialis, John Paul II built upon Paul VI’s statement, affirming that free trade serves as a protector of the universal destination of goods, especially to those in less developed nations. John Paul writes,
The Church’s social doctrine has time and again called attention to aberrations in the system of international trade, which often, owing to protectionist policies, discriminates against products coming from poorer countries and hinders the growth of industrial activity in and the transfer of technology to these countries.
In 1999, the Pontifical Council for Justice and Peace lamented that
tariff escalation . . . has generated trade distortions on the world market, menacing small farming . . . in poor countries. . . . The negotiations on agriculture should bring about a renewed commitment to substantially reduce the obstacles to market access—tariffs, domestic support and export subsidies—for agricultural and processed goods from developing countries. Less-advanced developing countries should be granted “bound, duty-free access” to markets.”
Recent popes have also applied these principles to specific situations during their pontificates. In his visit to Cuba in the late 1990s, John Paul II applied his open markets principle to the island nation:
In our day, no nation can live in isolation. The Cuban people therefore cannot be denied the contacts with other peoples necessary for economic, social, and cultural development, especially when the imposed isolation strikes the population indiscriminately, making it ever more difficult for the weakest to enjoy the bare essentials of decent living, things such as food, health and education. All can and should take practical steps to bring about changes in this regard.
Similarly, in a trip to Bethlehem in 2009, Benedict XVI called for the lifting of the Gaza embargo. The popes observed that embargoes do not hurt the totalitarian leaders to any large degree; instead, they hurt entire populations.
In a 2001 homily at the Mass for the Jubilee of Workers, John Paul II reiterated that trade systems “must never violate the dignity and centrality of the human person.”
In his encyclical Caritas in Veritate, Benedict confirmed Paul VI’s insight that “high tariffs imposed by economically developed countries . . . still make it difficult for the products of poor countries to gain a foothold in the markets of rich countries” (33). In short, the Magisterium has been teaching us that trade restrictions—whether embargoes or tariffs—can violate man’s dignity, his flourishing, and even his ability to survive.
War, Manfacturing, and Protectionism
Let’s conclude this discussion with three brief but important points that relate to morality in practical ways.
First, free trade prevents war. Many years ago, Montesquieu—a man who proved influential to the founders of America—observed, “When two nations come into contact with one another they either fight or trade. If they fight, both lose; if they trade, both gain.”
Why is that? Part of the reason is found in what we have already discussed: If the universal destination of goods is hampered, countries begin to look at each other as enemies. But if they trade, preferably with no restrictions at all, they become friends, or we might say “trading partners.” As Montesquieu observed, “peace is the natural effect of trade.” When we discuss the morality of free trade, we should consider that trade conflict historically has sometimes morphed into military conflict.
Second, tariffs are taxes against the innocent. Tariffs are frequently referred to as retaliatory measures, but it’s fair to ask: retaliatory to whom? Tariffs are not paid by the originating governments, who may have an unjust trade policy; rather, they are paid by consumers like you and me. Taiwan isn’t “slapped” with a tariff; Americans are. That is an injustice, especially to families already on the economic margins.
Third, some arguments for tariffs are predicated on faulty numbers. We’ve all heard others make the observation, “We need protective tariffs on our goods because America doesn’t manufacture anything anymore!” But here are the numbers: Last year, America produced about $2.5 trillion worth of manufactured goods—ranking it second-highest of all the countries on Earth. Although it is true that China produced about twice as much as America last year, let’s remember that China has about four times the population of the United States. If we want to compete better with China, we don’t need more tariffs. We need to have more children.
In the final analysis, the term “trade war” is more apt than is often imagined. The demand for protectionist measures itself often employs tactics used during war, such as blockades. But as economist Henry George noted many years ago, “protective” tariffs don’t block other nations; they block our own. He writes,
Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade. The difference between the two is that blockading squadrons is a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.
Sounds like a point that the Church has been making for centuries.