Charles Koch Slams Trump And Tariffs: "Free Trade Is Essential To American Prosperity"

Charles Koch, one of America's most well-known industrialists (even if he's more widely recognized for his political activism) has published a scathing editorial in the Washington Post warning that President Trump's planned steel and aluminum tariffs would kill far more American jobs than they would create.

While the trade barriers will no doubt benefit a few beleaguered industries - US steel producers, for one - overall, they will kill far more jobs than they create, Koch argued. Because of this, it's incumbent upon US business leaders to take their displeasure directly to the president.


It is "no coincidence", said Koch - who, as a libertarian, opposes protectionism at the ideological level - that quality of life in the US has improved over the years as the average US tariff on imported goods has fallen - from nearly 20% in 1932 to less than 4% in 2016. Koch adds that, "throughout history" countries with the freest and most open trade have also been the wealthiest.

Just as the United States benefits from the ideas and skills that opportunity-seeking immigrants bring with them, free trade has been essential to our society’s prosperity and to people improving their lives.

The same has been true throughout history. Countries with the freest trade have tended to not only be the wealthiest but also the most tolerant. Conversely, the restriction of trade — whether through tariffs, quotas or other means — has hurt the economy and pitted people against each other. Tariffs increase prices, limit choices, reduce competition and inhibit innovation. Equally troubling, research shows that they fail to increase the number of jobs overall. Consider the devastation of cities such as Detroit, where trade barriers to aid the auto industry did nothing to halt its decline.

Furthermore, US consumers, particularly those in low-wage jobs who can "least afford" any kind of financial hardship will be hurt by the tariffs, which could send prices of consumer goods rocketing higher. Koch adds that, after helping consumers to keep more of their money by passing tax reform, it "makes little sense" to force them to waste those savings on higher consumer prices.

The administration’s recent decision to impose major steel and aluminum tariffs — on top of higher tariffs on washing machines and solar panels — will have the same harmful effect. Without a doubt, those who can least afford it will be harmed the most. Having just helped consumers keep more of their money by passing tax reform, it makes little sense to take it away via higher costs.

Koch recognizes that Koch Industries would likely benefit from import tariffs (it is involved in the steel production business) but he said corporate leaders must reject "short-term thinking" (something they've historically been opposed to doing) and push for policies that "must benefit everyone, not just the few."

One might assume that, as the head of Koch Industries — a large company involved in many industries, including steel — I would applaud such import tariffs because they would be to our immediate and financial benefit. But corporate leaders must reject this type of short-term thinking, and we have. If we are to have a system in which businesses can succeed long term, policies must benefit everyone, not just the few.

To be sure, tariffs aren't the only aspect of the US economy that threatens free trade and competition, Koch said...

Unfortunately, tariffs are not the only problem. Our entire economy is rife with cronyism, resulting in regulations and subsidies that are destroying competition, opportunity and innovation. Koch Industries benefits from many of these, as do many established companies, but we consistently work to eliminate them. We only support policies that are based on equality under the law and that help people improve their lives. This is why we successfully lobbied to end direct ethanol subsidies, despite being one of the largest ethanol producers in the United States. It is why we fought against the inclusion of a border adjustment tax in the tax-reform package, even though it would have greatly increased our profits by increasing costs to consumers.

This isn't the first time the Kochs, whose network of political groups spent more than $250 million during the 2016 race, have come out against a Trump policy: Last year, the Kochs' vocally opposed the original House health-care bill, which, notably, never made it to the president's desk.