Cecil Bohanon and John Horowitz: Trump’s policy on international trade shares principles with DEI

According to the White House, President Trump’s “Fair and Reciprocal Plan” on trade will “seek to correct long-standing imbalances in international trade and ensure fairness across the board.” Although in different domains, the reciprocal tariff policy and diversity, equity and inclusion programs share underlying principles that seek to address imbalances and promote fairness.

To promote fairness, the White House announced that the United States would impose additional tariffs calculated as the trade deficit in goods the United States ran with a country divided by the total amount of U.S. imports of goods from the country. This rate was cut in half, according to Trump, “to be kind.” For example, the United States ran a $66 billion trade deficit in goods with South Korea and imported $132 billion of South Korean goods. Sixty-six billion divided by 132 billion is 50%, and dividing 50% by two means the United States would impose an additional 25% tariff on all South Korean goods.

The implicit assumption is that a trade deficit in goods with any country is evidence that foreign countries discriminate against American goods. However, even countries where the United States has a trade surplus would be charged a 10% tariff.

Likewise, many DEI advocates insist that differences in income between different groups show that individuals from marginalized groups are not receiving equitable treatment. They often advocate for and administer programs designed to remedy what they perceive as unfair outcomes.

Many argue that statistical differences between groups are not necessarily evidence of unfairness. Thomas Sowell argues, “Nothing is easier than to find statistical disparities between groups. They exist in countries around the world, with and without discrimination. … Their actual socioeconomic effects are an empirical question, not a foregone conclusion.” Others critique the effectiveness and adverse effects of many DEI programs.

Most everyone we know agrees with the goal of equality of opportunity. No individual should be subject to invidious discrimination based on their gender, race, skin color, ethnic identity, religion or sexual identity. Much of the debate over DEI is about how close or how far off our society is in attaining equal opportunity and what methods are most effective and appropriate for reaching the goal.

Although the Trump administration is considered anti-DEI, its view on international trade shares underlying principles with DEI programs, focusing on fairness claims and corrective measures to correct perceived wrongs. In both cases, proposed remedies can be highly problematic.•

__________

Bohanon and Horowitz are professors of economics at Ball State University. Send comments to [email protected].