Tariffs and the Common Good

by CAPP-USA

What is a tariff? A tariff is a tax or duty imposed on goods traded between countries.

Basically, tariffs regulate trade by making foreign products more expensive.

Types of Tariffs

There are two basic types of tariffs: Import – a tax on goods brought into a country and Export – a tax on goods leaving a country.

Tariffs may be used for various purposes: Protective Tariffs are designed to shield domestic industries from foreign competition; Revenue Tariffs are primarily used to generate government income; Retaliatory Tariffs are used in reprisal for imposition of a tariff; Political Tariffs are used primarily as leverage to attain non-economic ends.

Catholic Social Teaching and Tariffs

The Catholic Church does not address tariffs in detail. She recognizes both the benefits of free trade and the right of nations to regulate their economies.

But her social doctrine provides principles (Human Dignity, Solidarity, Subsidiarity) that can be applied to economic policies like tariffs.

The Church “calls for prudence” (Catechism of the Catholic Church, 1906) acknowledging that trade be regulated to serve the common good, protect workers, and prevent exploitation and that nations have the right—and duty—to intervene in markets when necessary to ensure economic justice and social stability.

So, Are Tariffs Good or Bad?

It depends.

Tariffs can protect national industries and workers and prevent economic exploitation or domination. They generate revenue.

They also may lead to inflation and trade wars and/or economic slowdowns. They can hurt the poor and fuel economic isolationism rather than global cooperation.

A definitive answer requires prudential judgment – based on the objective facts of each case – and on internalizing and applying the principles of Catholic Social Teaching.

Tariffs in Light of Catholic Social Teaching

No specific papal encyclical or magisterial document directly discusses “tariffs” in a modern economic context.

But let us look at tariffs through the lens of key Catholic Social Teaching principles as these can help us evaluate specific tariffs:

The Common Good – The Church emphasizes the importance of the common good, which includes ensuring that economic policies benefit society as a whole rather than just a few. (CCC, 1905-1912) “The creation of this wealth must always be at the service of the common good, and not only for the benefit of a few.” (Pope Francis)

Tariffs could be viewed in this light if they protect local industries and jobs, but they should not lead to exploitation or unfair trade practices.

Preferential Option for the Poor – Economic policies should aim to reduce poverty and inequality. Tariffs might be supported if they help maintain jobs in poorer regions or countries but criticized if they lead to higher prices for goods that disproportionately affect the poor. (Compendium of the Social Doctrine of the Church, 182)

“In order that international trade be human and moral, social justice requires that it restore to the participants a certain equality of opportunity.” (Pope St. Paul VI, 61)

Universal Destination of Goods – “God gave the earth to the whole human race for the sustenance of all its members, without excluding or favoring anyone.” (Pope St. John Paul II, 31) “All other rights…including the rights of property and free trade, are to be subordinated to this principle.” (Pope St. Paul VI, 22)

Solidarity – This principle involves a recognition of the interdependence of all peoples. Tariffs that excessively protect one nation’s economy at the expense of others might be critiqued from this perspective.

Trade policies should encourage cooperation among nations and tariffs that excessively protect one nation’s economy at the expense of others might be critiqued from this perspective, advocating for a more balanced approach to global trade.

Subsidiarity – This principle suggests that decisions should be made at the most local level possible that is effective. In terms of tariffs, this might mean supporting local or national economies where needed but also not unnecessarily centralizing economic power or decisions.

“[C]ompetition should not be eliminated from trade transactions; but it must be kept within limits so that it operates justly and fairly”. (Pope St. Paul VI, 61)

“High tariffs imposed by economically developed countries…make it difficult for the products of poor countries to gain a foothold in the markets of rich countries.” (Pope Benedict XVI, 33)

Tariffs may even be justified but unjust – if they create unnecessary barriers that harm the poor.

Catholic Social Teaching Calls for Just Trade!

The Church promotes justice in economic exchanges. This includes fair wages, just prices, and fair-trade practices, and here both Tariffs and Free Trade could be justified.

While the Church recognizes that the development of peoples is enhanced by the removal of tariffs she also recognizes that “Free trade can be called just only when it conforms to the demands of social justice”. (Pope St. Paul VI, 59)

The key is always “justice” — “Isn’t it plain to everyone that…justice in international trade would be of great benefit to the developing nations, and that they would produce lasting results?” (Pope St. Paul VI, 61)

Just trade “concerns first and foremost the wealthier nations…and presents a three-fold obligation: 1) mutual solidarity—the aid that the richer nations must give to developing nations; 2) social justice—the rectification of trade relations between strong and weak nations; 3) universal charity—the effort to build a more humane world community”. (Pope St. Paul VI, 44)

Catholic Social Teaching advocates for a balanced approach to tariffs, one that considers the welfare of all stakeholders, promotes justice in trade, and aligns with broader social justice principles.

Bottom Line

Catholic Social Teaching does not oppose or support tariffs but insists that trade policies uphold the common good, protect the vulnerable, and encourage international cooperation.

Indeed, tariffs may even be justified but unjust – if they create unnecessary barriers that harm the poor.

The Church challenges policymakers to ensure tariffs and trade laws do not become tools of oppression but instead serve justice and human flourishing.

“In order that international trade be human and moral, social justice requires that it restore to the participants a certain equality of opportunity.” (Pope St. Paul VI, 61)