Who are we running the country for?

This is presented as a grand problem:

Foreign exporters – chiefly China – will race to offload stock they can no longer sell competitively in the US, possibly undercutting British producers.

All eyes will be on the car industry. China will be looking for buyers for its electric vehicles (EVs). Meanwhile, Germany’s mighty auto industry must also find new buyers for its vehicles if Trump hits the EU with tariffs.

This risk is that Britain becomes a dumping ground. A surge of imports would mean cheaper prices for consumers – but threaten to deal a hammer blow to local businesses, which would face a fresh wave of competition.

OK, so consumers benefit from everyone selling us cars for cheap. Presumably the environment also benefits - we’re told that us all using EVs is such a benefit, aren’t we? - so that’s good too.

Who loses then? Local producers - but we need to be careful here. Trade does not affect the number of jobs in an economy. That’s set by the combination of monetary and fiscal policy. Trade affects which jobs in the economy. Cheap Chinese EVs roaring in affects the domestic car building industry, obviously. Which must either become more productive - it is indeed trade competition that increases productivity - or leave the market. Yes, transitions are always difficult but those leaving the domestic car industry will not be left bereft - recall, the number of jobs is determined by policy, not trade.

That is, who really loses from trade competition? The local and domestic capitalists. And despite the usual accusations thrown at free marketeers like ourselves no, we do not recommend that the economy is run for the benefit of the capitalists. Rather, for those of the consumer.

So, electric vehicles are about to get cheaper. Happy Days, eh?

Tim Worstall