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I’m a Tariff Man
From the President’s Twitter account: “President Xi and I want this deal to happen, and it probably will. But if not remember … I am a Tariff Man.”
“When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so,” the president wrote. “It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.”
The mocking reactions were predictable enough from both the right and the left. It’s interesting, too. From the left it seems we’ve finally found a tax the Democrats don’t want to embrace and a willingness to tell unionized industrial workers in America to go pound sand. From the right, we’ve finally found an issue where they’re willing to say that Ronald Reagan was full of it.
“Wait a minute,” you say. “NAFTA had its roots in the Reagan Administration!” True enough, but Reagan’s was also a presidency full of protectionist tariffs and policies*:
- Forced Japan to accept restraints on auto exports;
- Tightened considerably the quotas on imported sugar;
- Negotiated to increase the restrictiveness of the Multifiber Arrangement governing trade in textiles and apparel;
- Required 18 countries, including Brazil, Spain, South Korea, Japan, Mexico, South Africa, Finland, Australia, and the European Community, to accept “voluntary restraint agreements” that reduce their steel imports to the United States;
- Imposed a 45% duty on Japanese motorcycles for the benefit of Harley Davidson, which admitted that superior Japanese management was the cause of its problems;
- Raised tariffs on Canadian lumber and cedar shingles;
- Forced the Japanese into an agreement to control the price of computer memory chips;
- Removed third-world countries on several occasions from the duty-free import program for developing nations;
- Pressed Japan to force its automakers to buy more American-made parts;
- Demanded that Taiwan, West Germany, Japan, and Switzerland restrain their exports of machine tools;
- Accused the Japanese of dumping roller bearings on grounds so that the price did not rise to cover a fall in the value of the yen;
- Accused the Japanese of dumping forklift trucks and color picture tubes;
- Extended quotas on imported clothes pins;
- Failed to ask Congress to end the ban on the export of Alaskan oil and timber cut from federal lands;
- Redefined dumping so domestic firms can more easily charge foreign competitors with unfair trade practices;
- Beefed-up the Export-Import Bank, an institution dedicated to distorting the American economy at the expense of the American people in order to artificially promote exports of eight large corporations.
This was not out of character for Reagan. In the 1980 Republican Platform his ideals toward trade was laid out in clear and simple language. “The [Carter] Administration’s inability to ensure fairness and equity between our nation and some of our trading partners has resulted in massive unemployment in many core industries. As we meet in Detroit, this Party takes special notice that among the hardest hit have been the automotive workers whose jobs are now targeted by aggressive foreign competition. Much of this problem is a result of the present Administration’s inability to negotiate foreign trade agreements which do not jeopardize American jobs. We will take steps to ensure competitiveness of our domestic industries to protect American jobs.” (Emphasis mine.)
As international trade agreements began to be hammered out, through the Republican Administrations of the two Bushes and the Democratic Administrations of Clinton and Obama, how did this work out? Not so well? Hey, these jobs are gone and ain’t coming back. No Reaganite worth his salt would embrace Trump’s tariffs, right?
Again, from the ’80 Reagan platform with my emphasis:
The Republican Party believes that protectionist tariffs and quotas are detrimental to our economic well-being. Nevertheless, we insist that our trading partners offer our nation the same level of equity, access, and fairness that we have shown them. The mutual benefits of trade require that it be conducted in the spirit of reciprocity. The Republican Party will consider appropriate measures necessary to restore equal and fair competition between ourselves and our trading partners.
If you asked any conservative if we should unilaterally disarm militarily they would rightfully look at you as if you had grown a second head. Yet, they will insist on complete unilateral disarmament in trade. But, Trump, right?
*Source: Mises Institute
Published in General
Which jobless Americans can’t buy anyway.
I think Trump should be more pro-free enterprise than he currently seems to be.
Trump’s support of deregulation, his support of corporate tax cuts and income tax cuts indicate support for the free enterprise system.
This is good because the free enterprise system consistently outperforms central government planning.
But then, with trade, Trump takes the view that by punishing the American consumer with high taxes there will be an overall benefit to the American people.
Or perhaps Trump is bluffing and he knows tariffs are harmful to the American economy, but he’s hoping that China and other nations will blink before additional damage to the American economy is done.
Either way, it would be better if we dropped the import tariffs and let the American consumer spend his/her money without additional government interference.
Also, if the source of income comes from selling products made elsewhere, these supporting roles alone can’t possibly support the products being sold there. It doesn’t work – it’s a reference error (in Excel parlance). The store or business won’t operate there unless there is some other source of income aside from its employees/vendors.
And at the cost of their fellow Americans prosperity, over and over again . If your a winner of uneven trade, hooray for you.
We can go back and forth on this, however I believe the results can be altered for a better outcome for America.
We shall see how the Trump policies play out. I think he will need a secound term for them to show fruit. The Chinese will wait, the next guy will reverse course and things will stay just like you like them, if he looses.
Some jobs do disappear; some reappear elsewhere; some new jobs are created… that is the very nature of a free economy. Things which made the Rust Belt appealing to labor intensive manufacturing are no longer as appealing and labor intensive manufacturing not as common. There is very little government can or should do to change that.
What’s the unemployment rate?
It would be very easy for our government to make sure that everyone is employed. All the government would have to do is raise taxes and then the government would spend the money hiring people.
If the goal is simply to make sure that everyone has a job, there is no doubt that government intervention in the economy can accomplish this goal.
But if the goal is a high standard of living, government needs to allow free people to spend their dollars freely, without extensive government intervention.
So, this debate we are having is simply a disagreement between those who support limited government, individual freedom and free enterprise and those who support government intervention, especially when government intervention is made to sound patriotic.
Other than do all they can to assure the Trade agreements are fair for America. Period.
What is “uneven trade?”
You believe government can manage the economy better than the market? How many examples to the contrary would you need to convince yourself otherwise?
Sorry but I am not following. Are you saying products made elsewhere cannot support jobs here?
You see this a lot in the microcosm of gaming stores.
Consistently, you can find the products online for far cheaper than what you get with the profit, rent, electric, wage mark-up. Everywhere, they are closing because they can’t sell the merchandise in store. Frequently, these stores were meeting places for gamers, as well, where they would play together. With the store under, there is no meeting place.
Others have cropped up trying different viable options. One of the best in our area has a restaurant with craptastic food, but loanable board games, video games, and large tables for d&d players. They don’t sell any gaming merch.
Another is a split used game venture that is predominantly a tournament studio, working off advertising to stay afloat. They do sell some merch.
Its questionable how long it can last, but these businesses that encourage face-to-face interaction among some of the most anti-social among us should be viewed as a net positive in our social structure and we should want them to be viable for other conservative values than just capitalism (or have we forgotten that political is more than economics?)
As I said earlier, I’m not talking about that part. I’m talking about the part which can be attributed to unfair trade practices. I might also be open to measures to encourage production engines to remain here or to open here.
I’m also interested in what happens when jobs don’t reappear, when other industries aren’t around to absorb, when new industries can’t take everybody. I think we already have seen it, and I think we need something more than handing out the UHaul website. Not everybody can go to ND or Texas or wherever the next boom will be anyway. I’m not saying that this is a government issue, but the very least we can do is fix it wherever it actually is a government issue (like with unfair trade practices).
I’m saying that import and service alone can’t support jobs here. Unless there is a reserve of capital or credit to draw on; even then it will not last forever. Otherwise there wouldn’t be a rust belt or decaying emptying cities and towns; if we could just open a few Walmarts, barber shops, insurance agencies, and auto mechanics then all could be sustained. Maybe revitalize the area with a convention center, hotels, and restaurants and hope that outsiders bring cash infusions with them.
Many places, I think, are coming to the end of that road; places like Detroit, Chicago, San Fran, LA, NY, even flyover, etc. We’ll see what happens. Hopefully not the catastrophe I fear. Hopefully we can find a way forward.
Tariff policy as a matter of international negotiations does not qualify as “a managed economy.”
If the people of China are unable to purchase an American made automobile because China’s government has enacted a restrictive trade policy, this simply means that China’s government has decided to harm the people of China.
Sure, the people of China will find plenty of work. But they won’t be able to enjoy an American car.
That’s bad for the individual Chinese people who have been harmed by a bad economic policy implemented by the Chinese government.
I don’t want the American government implementing the same harmful economic policy and harming me the same way the Chinese government is harming the people of China.
When Trump raises peoples’ taxes by jacking up those import tariffs, making imported washing machines more expensive, making a host of other goods more expensive, he’s hurting the American people.
The American CEO can wipe the sweat off of his brow and say, “Good. Trump has raised taxes on my competition. Now I can raise my prices and the American consumer will still have to buy my product because the imports have higher tariffs levied on them.”
This helps the American CEO. But it hurts the average American who can no longer afford the imported goods he/she used to enjoy, at least without paying Trump’s new higher taxes.
Let people spend their money without the government mucking around and interfering.
If I want a car made in South Korea or red potatoes grown in Mexico, the government should not get in my way.
Less government, less spending, less taxing more freedom!
According to whom?
I’m curious if the soybean farmer or washing machine consumer appreciates the distinction?
People are workers, not just consumers. Whenever I read something about how great it is to have cheaper flatscreen TVs, I agree, but if you don’t have a job, you don’t have a place to hang the flatscreen. China does harm its consumers if it makes US cars more expensive, no question about it. But it also keeps Chinese auto workers at work. There are tradeoffs either way. With tariffs we choose to sacrifice some cheaper stuff in return for keeping more of our people employed.
Indeed, what companies want, and what government wants, is stable employees with families. They come to work on time and they are committed.
And they are not mobile – which is part of their stability.
Kill their jobs and you will likely kill the family unit as well.
I don’t think this is speculation; in many parts of the US I think that experiment has been run for a few decades already.
But it’s ultimately destructive to make people and businesses secure in their jobs and enterprises, no matter how badly they do their jobs and no how awful they manage their businesses.
General Motors made a series of bad decisions. When they were on the brink of bankruptcy, the government bailed them out. The reason was, “To save jobs.”
But when you have a bunch of businesses that produce products that people don’t want to buy, it’s best to let the businesses fail. This way, the resources that had been put into the failing business can be reallocated to a more productive business.
Paying someone to rake leaves does give the worker a paycheck, but it stiffs the person who is forced or manipulated into paying for it.
What is an “unfair trade practice?”
I think that’s been covered sufficiently. Are you really unacquainted with what might be considered unfair or even malevolent trade practices? If so, then I suggest that someone else on the thread or even a Google search could explain better than I could.
You keep saying that, but I know I (and I think others on this thread) have made clear that that isn’t what the issue is. No one is suggesting we keep GM alive despite decades of bad decisions. No one is suggesting make work government programs or forcing anyone to pay for leaf raking or whatever.
Actually, some people on this thread have mentioned that we should be willing to accept higher taxes on imported goods, even if it hurts us financially, because this will result in some of our fellow citizens having jobs.
That is a make work government program. It’s not as direct as having the government hire someone, but it imposes taxes (tariffs) on the general population so that certain businesses have a better shot at selling their products to Americans, the result being that more Americans will be employed.
It’s a bad idea. Hopefully, this one bad idea by Trump won’t completely overwhelm his good ideas, like tax cuts and deregulation.
You are conflating very different things. Accepting higher costs on imported goods is not the same as keeping GM alive nor is it the same as government make work. I think we’re talking about a specific and relatively narrow thing but you seem to want to expand to include managed economies and socialism.
The problem is virtually anything that allows one party to sell a product at a lower cost or higher quality than another could be considered “unfair.” The number of variables that go into that makes fairness a completely subjective matter. Any attempt to use government to impose one party’s understanding of what is fair simply empowers government to pick who wins and who loses.
Isn’t that what the President has been trying to do? Or is he working some kind of three-dimensional chess?
Your insistence on the interchangeability of the terms ‘Tarrifs” and “Taxes” does not actually make them interchangeable.
No. People on this thread have made it seem as though there will not be enough jobs for everyone unless we raise import tariffs high enough to allow American businesses to sell their products.
The point has been made that low cost imported goods that people enjoy might have some benefits to people, but what about that poor American steel worker or auto worker who doesn’t have a job?
So, we are being asked to accept higher import tariffs, which means we either must pay these higher tariffs or we purchase a domestic product, even if we don’t like it as much as the imported product. We are asked to do this so that some of our fellow Americans can have a job.
So, this is a make work government program. And it will give Americans jobs. But as I mentioned before, just because all Americans become employed doesn’t mean that Americans are enjoying a high standard of living.
If government is raising the cost of living via tariffs, that’s going to make people poorer, not wealthier.
Yes that is a problem, but it’s a problem with government by the people in general. People will differ about truth, good, justice, fair, harm, etc.
I, President Trump, President Reagan, and the 80’s Republicans would agree with you as a general principle. However, This cannot be a one way street, and allowing other governments to subvert that natural system with the effect of harming some of our citizens is also picking winners and losers. True, even this distinction could serve as justification for deep management of the economy, but then we as voters are responsible for electing representatives to use prudence and wisdom in steering an optimal course.