The European Union’s Joan Robinson violation
The EU has announced it will match Donald Trump’s steel tariffs, doubling levies on imports to 50% in a decision condemned as “an existential threat” to the industry in the UK.
The effect on the UK’s steel industry is whatever. Our point here is the idiocy of the EU’s decision for the EU. That full fat Joan Robinson point:
The popular view that free trade is all very well so long as all nations are free-traders, but that when other nations erect tariffs we must erect tariffs too, is countered by the argument that it would be just as sensible to drop rocks into our harbours because other nations have rocky coasts. This argument, once more, is unexceptionable on its own ground. The tariffs of foreign nations (except in so far as they can be modified by bargaining) are simply a fact of nature from the point of view of the home authorities, and the maximum of specialization that is possible in face of them still yields the maximum of efficiency. But when the game of beggar-my-neighbour has been played for one or two rounds, and foreign nations have stimulated their exports and cut down their imports by every device in their power, the burden of unemployment upon any country which refuses to join in the game will become intolerable and the demand for some form of retaliation irresistible. The popular view that tariffs must be answered by tariffs has therefore much practical force, though the question still remains open from which suit in any given circumstances it is wisest to play a card.
Tariffs are the wrong thing to do even as political pressure might make them inevitable. But as far as we’re aware the European Commission is unelected precisely and exactly to enable them to do the technocratically correct things protected from anything so gauche as electoral or political pressure.
So even that non-democracy doesn’t work then.
Once again - whatever the other guy’s trade rules unilateral free trade is still the correct answer.
Tim Worstall