Christmas tariffs for Santa

President Donald Trump’s trade wars have increased tariffs on goods from China, Mexico, the European Union, Argentina, Brazil, and other countries. Are tariffs on Santa Claus next? They should be, according to the logic justifying these trade wars.

President Trump has accused other countries and regions of not “trading fairly.” Sometimes he claims other countries are trading unfairly by manipulating their currencies to make their exports cheaper, as he did recently with Brazil and Argentina.

In other instances, the mere presence of a U.S. trade deficit is taken as an indication of unfairness. After meeting with French President Emmanuel Macron last summer, President Trump stated, “I came into a position where the European Union was making anywhere from $100-$150 billion a year in deficits to the United States. They were making it, and we were losing it, and so we had to do something that is fair.”

By these standards, Santa Claus is the most unfair trader of them all. His elves manufacture goods in the North Pole. I can’t find any evidence in the Christmas literature that Santa imports any of the inputs to this production process from the United States, or anywhere else for that matter.

On Christmas Eve, his sleigh crosses over the U.S. border, without even clearing customs, to “dump” his products in the homes of every good boy and girl. Santa also has the gall to charge a subsidized price of zero.

No government has dared to manipulate their terms of trade so much that they give Americans the products for free. And people in every country at least buy something from American producers. Not so for jolly old St. Nick. Why the double standard for the great unfair trader in the North Pole? The economics are the same as they are with the countries Trump has imposed tariffs on.

Kids across our country benefit from Santa Claus’s “unfair” trade practices in precisely the same way that American consumers benefit from other countries’ “unfair” trade practices that make their exports to the United States less expensive.

But American toy producers are harmed by Santa’s unfair trade practices in precisely the same way that Americans firms and industries that compete with imports are harmed by foreign countries’ “unfair” trade practices.

However, harm to a particular U.S. firm or industry is not the same as net harm to the entire United States. Santa’s “unfair” trade with the United States makes the American toy industry smaller than it would otherwise be.

But that, in turn, frees up American labor and capital to go into other industries that make goods for us adults. Overall, both kids and adults in the United States have more stuff as a result of Santa’s “unfair” trade. The same is true when other countries practice “unfair” trade.

If Dr. Seuss were an economist, he might have had the Grinch impose prohibitive tariffs on exports from the North Pole rather than running all over Whoville to steal all the gifts on Christmas Eve. Whoville would be poorer either way.

As far as I know, President Trump hasn’t proposed taxing Santa, but he has imposed tariffs on countries that export the Christmas gifts that we give to each other. As a result, there will be fewer and more costly gifts under all of our trees.

Dr. Seuss’s Grinch eventually had a change of heart and returned all of the gifts to Whoville. President Trump should do the same for Americans by ending his trade wars.

Benjamin Powell, Ph.D., is a senior fellow at the Independent Institute, Oakland, Calif. and executive director of the Free Market Institute and professor of economics at Texas Tech University, Lubbock, Texas.