What would the father of protectionism say to Trump?
Published: 17 Jan. 2025, 00:00

Baek Woo-jin
The author is an economic columnist and CEO of Geuljaengi.Inc.
Adam Smith, the founding father of economics, mentioned the “invisible hand” only once in “The Wealth of Nations” (1776). His reference came in opposition to measures that restricted foreign imports through high tariffs or outright bans. He argued, “I have never known much good done by those who affected to trade for the public good,” asserting that while individuals pursue only their self-interest, they are “led by an invisible hand to promote an end which was no part of their intention.” That unintended outcome, he claimed, was “the most beneficial to society.”
Smith was a vocal critic of mercantilism, which sought to increase national wealth by limiting imports and encouraging exports. He opposed these policies for prioritizing the interests of manufacturers over those of consumers.
However, Smith wasn’t always correct. The use of protective tariffs to nurture fledgling industries has proven necessary at times. German economist Friedrich List championed such policies, which later propelled industrial growth in Germany, Japan and Korea.
Donald Trump, who will assume office as the 45th President of the United States on Jan. 20, advocates for the “visible hand” over Smith’s “invisible hand.” One of Trump’s preferred tools is tariffs. He has already pledged to increase what he calls “the greatest invention” of tariffs. While the current U.S. average tariff rate is approximately 2 percent, Trump has vowed to raise universal tariffs to 10–20 percent by executive order, with tariffs on Chinese imports potentially reaching as high as 60 percent. Such policies would undoubtedly have Smith shaking his head in disapproval.
There are predictions that the actual tariff rates under Trump may not reach these promised levels. However, it’s clear that the closer tariffs align with his campaign promises, the greater the upward pressure on prices. Should tariffs trigger inflation, Trump’s core support base might begin to waver. Moreover, if major economies respond by raising their own tariffs, the global economy could face significant contraction.
Even Friedrich List might raise an eyebrow at Trump’s approach. One could imagine him advising the new president: “Tariffs must be applied selectively to support targeted American industries. A scattershot approach risks boomeranging harm back onto the U.S. economy.”
Translated using generative AI and edited by Korea JoongAng Daily staff.
with the Korea JoongAng Daily
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