Tuesday, February 24, 2026

Tariffs can be a path to a free market

 Reciprocal tariffs can be a second-best, transitional tool toward a freer market, but they are not the ultimate free-market end state. In a laissez‑faire framework, the goal is zero tariffs and open competition; reciprocity is useful only insofar as it credibly accelerates mutual tariff cuts on the way to zero.

How it works (if used strictly as a path to zero):

  • Start from the principle that tariffs are taxes on consumers and distort prices; the target is unilateral and/or mutual elimination of tariffs.
  • Use reciprocity only as a bargaining device: “we reduce if you reduce,” with a published schedule of symmetric cuts tied to automatic triggers.
  • Build in a ratchet: once a tariff is cut, it cannot be raised again; include sunset clauses that default to zero if both sides meet milestones.
  • Keep it broad and rules‑based: across‑the‑board, MFN‑consistent reductions; avoid carve‑outs and “managed trade” quotas that entrench lobbying and distortions.
  • Aim for mutual recognition and removal of non‑tariff barriers alongside tariff cuts to prevent backdoor protectionism.
  • If the partner refuses to liberalize, prefer unilateral low (or zero) tariffs anyway, because they benefit domestic consumers and producers that use imports as inputs. Reciprocity should not be a pretext to tax your own citizens.

Why this is only second‑best from a laissez‑faire view:

  • Tariffs, reciprocal or not, are government interventions that misprice trade and invite rent‑seeking.
  • Reciprocity can slip into protectionism (e.g., “balanced trade” targets), provoke tit‑for‑tat escalation, and add administrative complexity.
  • The cleanest free‑market policy is unilateral free trade; reciprocity is justified only as a short, rules‑bound bridge to reciprocal tariffs can be a path to a freer market only if they are narrowly designed as a temporary, rules‑based mechanism that locks in symmetric, automatic reductions to zero. Otherwise, they risk entrenching intervention rather than dismantling it.


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Tariffs can be a path to a free market

 Reciprocal tariffs can be a second-best, transitional tool toward a freer market, but they are not the ultimate free-market end state. In a...