Posted on 03/04/2018 7:13:16 AM PST by Oklahoma
One of the ironies of trade protectionism is that tariffs and import quotas are what we do to ourselves in times of peace and what foreign nations do to us with blockades to keep imports from entering our country in times of war.
Or consider that we impose sanctions on U.S. enemies such as North Korea, Russia, and Iran because we want them to feel the economic pain of being deprived of imports.
But now we are imposing sanctions on our own country, putting up tariffs supposedly to make Americans more prosperous. If ever there were a crisis of logic, this is it.
President Donald Trump genuinely believes that his steel and aluminum tariffs will save thousands of blue-collar jobs. And we know from our interactions with him that he truly cares about these workers in Pennsylvania, Ohio, and other Rust Belt states. We do, too, and we don’t want factories to shut down.
But even if tariffs save every one of the 140,000 or so steel jobs in America, they put at risk 5 million jobs in industries that use steel. These producers now have to compete in hyper-competitive international markets using steel that is 20 percent above the world price and aluminum that is 7 to 10 percent higher than the price paid by our foreign rivals.
Steel and aluminum may win in the short term, but steel-and-aluminum users and consumers lose.
Tariffs are really tax hikes. Since so many of the things American consumers buy today are made of steel or aluminum, a 25 percent tariff on these commodities may get passed on to consumers at the cash register. This is a regressive tax on low-income families.
Meanwhile, up to 5 million jobs will be put in harm’s way. And if U.S. steel-and-aluminum-using industries sell less to foreigners, the trade deficit goes up, not down.
Trump should also examine the historical record on tariffs. If he does he’ll see they have almost never worked as intended and have almost always delivered an unhappy ending.
The Smoot-Hawley tariff of 1929 was signed into law by Republican president Herbert Hoover. It gave us the Great Depression and worsened it along the way.
Richard Nixon’s 10 percent import surcharge contributed to the stagflation of the 1970s.
George W. Bush tried to save the steel industry by imposing tariffs on steel. If those tariffs had worked, we wouldn’t be having this discussion today.
Remember when we tried to save the color-TV industry with protectionist measures? Instead of saving it, we wiped out domestic production.
We aren’t persuaded by the Trump administration’s claim that we need to impose these tariffs for national-security reasons. Despite stiff competition from imports, many specialty steel producers are doing just fine, and are actually exporting steel to Mexico and Canada.
Meanwhile, Canada is the number-one exporter of steel to the United States. Does anyone really believe Canada is a national-security threat?
And tariffs, to be sure, are a two-way street. Canada and Mexico are now threatening retaliatory tariffs against America. This tit-for-tat trade breakdown could put NAFTA in serious jeopardy, inflict severe economic damage on all three nations, and spark a stock market meltdown.
Trump should continue to make American producers more competitive in global markets with tax-, regulatory-, energy-, and other pro-America-policy changes that bring jobs and capital back to the United States. This is happening at a furious pace right now. Almost overnight, Trump has made America the best and most reliable place in the world to invest. But steel and aluminum import tariffs work decisively against this goal.
In the early 1980s President Ronald Reagan invoked anti-dumping provisions against Japanese steel. It was one of the few decisions he later confessed he wished he hadn’t made.
Trump will come to learn the same thing. We hope he does so sooner, not later.
— Lawrence Kudlow, Arthur B. Laffer, and Stephen Moore are co-founders of the Committee to Unleash Prosperity.
Why do they list Russia as an “enemy”? That’s a neocon-Democrat talking point. Russia has lower income taxes than we do. Why am I supposed to fear Russia - and why are tariffs (sanctions) on Russian products fine with these “free market” economists?
Neocons seem to hate Russia because it blocked US-supported Islamic rebels from taking down Syria’s government. When did the American people agree to go to war against Syria’s government? Do these “free market” economists believe we should be spending tax dollars to take out Syria’s government? Why?
Larry Kudlow used to take calls on his radio show. he doesn’t seem to anymore (at least not on the program carried on my local station). That’s a pity. I like his show, but I’d like to hear him challenged once in a while
It’a direct assualt on the 2nd amendment.
Every Republican president, Lincoln through Reagan, imposed protectionist tariffs of one kind or other
You are today’s winner of the Putin Employee of the Day.
You call me a “Putin employee” instead of trying to answer any of my points. Typical neocon tactic - hurl smears when you don’t have an argument
Notice they call Russia an “enemy” - and favor trade restrictions against Russia - but don’t say anything about China (which is challenging us on all fronts, and mass-hacking us), or Saudi Arabia (home of 911 plotters). Curious.
To me, the tariffs seem like a sop to the labor unions in the US. Of course, it’s a common political tactic to take an issue and use it as a wedge to break off part of your political adversary’s constituency. Let’s hope he flips some of those rats sitting on the fence.
It was a campaign promise. I think it’s a play for blue collar swing state voters. He knows in the end it won’t cost him much of his base if any. It’s also a negotiation chip with the other countries. But yes it could be called a tax.
Free Traitors™ are, well, traitors.
As an academic exercise let me ask you, what would a complete trade embargo do to the USA, an embargo as an example of an extreme form of a tariff? Given that, what if the USA could no longer import consumer electronics then what would happen? I'll tell you what would happen, an economic miracle would happen. Factories would be built here, capital spent, people trained and employed and the economy would take off like gang busters.
Tariffs help unions - that’s true. But union membership is at 7%. So tariffs also help the the other 94%.
Think of trade deficits as arterial bleeding and a tariffs as a tourniquet.
Tariffs are a tool, an implement, much like the graphite rods in atomic reactors, used to slow down the excessive rate of reaction when in place, and withdrawn when the reaction speed has been slowed by just a little too much.
A tax? Tariffs have been used as such, but if relied upon too greatly to “generate” revenue, they become self-defeating. Tariffs should actually be revenue-neutral, ideally applied only to keep an excessively underpriced product from entering the country, when there is a good and abiding need that the nation become fully self-sufficient in production of that commodity or goods should the flow from another country become uncertain or embargoed completely. When the price from another country is directly comparable for the same price as production within your own country, then the tariff may be lifted or reduced to a very nominal level.
Tariffs are also useful as an economic weapon to be used in either attempting to gain a diplomatic parity with another country, or by reduction, a reward for acceptable behavior. It is assumed that economic self-interest is at work with both parties to a trade agreement.
Tariff agreements are very much like diplomatic negotiations, and in fact, are often linked in practice. When tariff and diplomatic negotiations break down, war often soon follows.
Six Simple Reasons ‘They’ Are Wrong On Tariffs
Townhall.com ^ | March 4, 2018 | Kevin McCullough
Posted on 3/4/2018, 5:26:09 AM by Kaslin
There was a simple reason why Donald Trump won the 2016 election. It wasn’t because Vladimir Putin was changing votes (though he didn’t.) It wasn’t because evangelicals voted for him in necessary numbers (though they did.)
The reason I felt strong enough about it the week of the election that I drew a map predicting how he would win—which states—and was correct, was far simpler than the wildest conspiracies you’ve heard.
He connected with working people, and they trusted him. Particularly they trusted him in states with a lot of empty production plants. Like making a solemn vow, they trusted him to keep his word.
Last week the Heritage Foundation calculated that the Trump administration has fulfilled close to 64% of his campaign agenda. This week he took one more enormous step to completion: tariffs on steel and aluminum.
The blowback came immediately. From the Wall Street Journal to The New York Times, CNN’s Jeffrey Sachs to Townhall’s Guy Benson the cries were all reflective of the same ominous warning.
For the day job in talk media I began engaging people on all sides of the issue and there are six points that the fearful trade-war-mongers I believe are wrong about. At the very least I believe they may be overstating the case.
1. Trade war is not a given - The most repeated statement in the collective analysis thus far asserts that an all out trade war will soon follow the implementation of the tariffs. Certainly in theory a nation that faces import tariffs to the United States could retaliate. But variables on a combination of factors would be a more probable cause for such. With steel we are looking specifically at China-whose steel industry is in part supported by government subsidies and a labor market that can be paid pennies on the dollar for the work necessary. This alone prevents the discussion of “free trade” being in any way “fair,” because China is cheating. China is also dependent for the USA to be a recipient of up to 20% of their total export volume. Our steel production suffers as they cheat. But they do not have the total upper hand.
2. Products may not cost more - The assumption that our products will go up significantly in price is a realistic concern. But it is not an absolute given. In the immediate period of implementation according to some of the best estimates the tariffs may raise the purchase price of a new car something close to $45, and a twenty-four pack of beer by .05 cents. But what happens if steel & aluminum production begins to match volume wise the amount we import from other world sources? Economics 101 teaches us that prices drop as inventory surges. If our steel production grows enough we could wipe out the gains mix-minused in our dependence on China.
3. The world doesn’t like it - Of all the pushback this reasoning is among some of the most inane. When the United States does what we have to do to shore up our markets, jobs, workers, and life we have less and less need to care what the world thinks about it. This isn’t hubris, this is independence. To be tied to China’s cheap steel, Saudi Arabia’s oil reserves, and the good graces of the global community fundamentally puts us at a more vulnerable position from an economic & national security standpoint. Like much of the rest of the Trump focus, America needs to shore up America’s capacity for whatever faces us, and being utterly dependent upon others doesn’t move us in that direction.
4. We shouldn’t pick winners & losers - This is an argument normally made when discussing competition between domestic companies here in the USA. Jonathan Hoenig, appearing on Neil Cavuto on Friday, repeatedly invoked this as some sort of determining factor as to why the tariffs should be prevented. But it’s an illegitimate argument. This isn’t picking one steel factory over another and using tax-payer incentives to cause one or the other to succeed. This is a fight for survival between a metal industry that has suffered enormous loss for the better part of multiple decades, and the slave labor of China. The winners in the near term are steel and aluminum workers.
5. The national security consideration - Those that have argued that a trade war is inevitable, seem to also forget the increasingly perilous hair trigger of real war that the globe is constantly on the edge of. If America were to find itself drawn into a conflict with North Korea or Iran, it is likely whatever degree of imports we get from China and Russia would immediately be frozen. Fifteen years ago more than a dozen aluminum smelters were in operation. Today there are only three and the entire capacity of one of those three is necessary just for the military and related technologies. We are more vulnerable than necessary, and increasing domestic production solves this vulnerability.
6. Had to be (as it was) done in the correct sequence - Because of the rapid growth of the economy by rolling back some 2000+ regulations coupled with the very real impact that Trump tax reform is having now is the absolute right time to push for this “leveling of the playing field.” Most Americans will be more likely to accept an increase in the price of their next car by $45 if they know that Americans are benefitting. They are even more so if they have on average $90 more per week appearing in their pay check.
President Trump should not have surprised anyone with this announcement. He campaigned on the idea and it is keenly linked to why he won the rust belt and the nation. The tariffs are called “protectionist” by voices trying to scare the American people. But fear is unnecessary.
If the five preceding presidents all held the same position (which they did) but were unable to get it done due to economic stagnation, terrorism, etc. now is the perfect time to take it up and create a far more favorable playing field for our domestic metals industry as well as the workers who would love to show the world the pride they take in American Steel and Aluminum.
The tariffs are the right thing to do!
http://freerepublic.com/focus/f-news/3637071/posts
Sanity -check comment of the day.
Thanks for a breath of fresh air. This thread was killing me.
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