Trump's Tariffs

As we forge ahead into the Donald’s second year of office, we are witnessing some serious improvements in America’s economy—taxes are being cut, production is up, wages are up, and

unemployment is down. The future hasn’t looked this bright since the best days of Dwight D. Eisenhower.

But then, suddenly, Trump dropped his hammer—punitive tariffs on three very essential imported items—steel, aluminum, and photovoltaic cells. The rates are steep—10% for aluminum, 25% for steel, and 30% for solar cells. These are among the most essential raw materials that we need for just about everything we manufacture and consume. These tariffs are effectively new and increased taxes on every American.

Two of our biggest industries, construction and automobile manufacturing, require vast quantities of these items. And there are many others. Raising their costs forces them to raise their prices, which in turn makes them less attractive to consumers. As a result, they sell less and lose money, and may even lay off some of their employees. Former Congressman Ron Paul said that the steel tariff by itself could cost nearly 40,000 jobs in the auto industry alone. Some American manufacturers could be inclined to relocate their entire factories to other countries and lay off all of their workers. At the same time, foreign manufacturers will reap the benefits of less American competition. And don’t forget the expected blowback and retaliatory tariffs on our own exports. Do we really want an import and export war?

Trump’s excuse is that several countries, especially China, are “dumping” these needed resources at cheap prices and are undermining American producers of the same items. What he doesn’t understand is that American manufacturers who consume these items at these lower prices are better able to compete on the world market and enhance their own exports. There is nothing wrong with this as long as government doesn’t stick its nose into it and meddle with it. Free trade benefits everybody, and this is no exception.

Massive forced increases in the prices of basic essentials are no-brainers. Has Trump even thought about the consequences? Up until now, I thought that he had at least a basic understanding of economics. Now I am beginning to have serious doubts.

Does Trump really believe that a protectionist scheme is going to help anybody? Does “getting back” against China (which produces only 2.9% of our steel imports) and other exporters do anybody any good? A tariff is simply another tax on the American people. It hurts everybody, producers and consumers alike. Yes, we have had tariffs throughout our history, but they were imposed on luxury items and the rates were modest. And back before we had income taxes, they were America’s source of revenue. Today we don’t need tariffs, especially on bare essentials.

There is one and only one moral and effective way to reduce our trade deficit—increase our own production. How do we do it? It’s simple. Free up our production and markets here at home. Cast off the government’s shackles and handcuffs—the regulations, mandates, licensure and other impediments that interfere with every person’s right to earn a living and buy and sell—and not just the federal ones, but the state and local ones as well. Back in the 1950’s, America was the manufacturing giant of the world. Why? Because there was almost nothing standing in the way of people who wanted to start a factory,

business, farm, store, or whatever, and build it up as far as his ability would allow. We can go back to that American dream. Just remove the obstacles. Get government out of the way and let free enterprise work.

Trump promised to “make America great again.” If his proposed tariffs pass the House and Senate, and he signs them, the result could very well be “make America hate again.”