Posted on 03/06/2018 7:48:47 AM PST by Kaslin
From Lincoln to William McKinley to Theodore Roosevelt, and from Warren Harding through Calvin Coolidge, the Republican Party erected the most awesome manufacturing machine the world had ever seen.
And, as the party of high tariffs through those seven decades, the GOP was rewarded by becoming America's Party.
Thirteen Republican presidents served from 1860 to 1930, and only two Democrats. And Grover Cleveland and Woodrow Wilson were elected only because the Republicans had split.
Why, then, this terror of tariffs that grips the GOP?
Consider. On hearing that President Trump might impose tariffs on aluminum and steel, Sen. Lindsey Graham was beside himself: "Please reconsider," he implored the president, "you're making a huge mistake."
Twenty-four hours earlier, Graham had confidently assured us that war with a nuclear-armed North Korea is "worth it."
"All the damage that would come from a war would be worth it in terms of long-term stability and national security," said Graham.
A steel tariff terrifies Graham. A new Korean war does not?
"Trade wars are not won, only lost," warns Sen. Jeff Flake.
But this is ahistorical nonsense.
The U.S. relied on tariffs to convert from an agricultural economy in 1800 to the mightiest manufacturing power on earth by 1900.
Bismarck's Germany, born in 1871, followed the U.S. example, and swept past free trade Britain before World War I.
Does Senator Flake think Japan rose to post-war preeminence through free trade, as Tokyo kept U.S. products out, while dumping cars, radios, TVs and motorcycles here to kill the industries of the nation that was defending them. Both Nixon and Reagan had to devalue the dollar to counter the predatory trade policies of Japan.
Since Bush I, we have run $12 trillion in trade deficits, and, in the first decade in this century, we lost 55,000 factories and 6,000,000 manufacturing jobs.
Does Flake see no correlation between America's decline, China's rise, and the $4 trillion in trade surpluses Beijing has run up at the expense of his own country?
The hysteria that greeted Trump's idea of a 25 percent tariff on steel and 10 percent tariff on aluminum suggest that restoring this nation's economic independence is going to be a rocky road.
In 2017, the U.S. ran a trade deficit in goods of almost $800 billion, $375 billion of that with China, a trade surplus that easily covered Xi Jinping's entire defense budget.
If we are to turn our $800 billion trade deficit in goods into an $800 billion surplus, and stop the looting of America's industrial base and the gutting of our cities and towns, sacrifices will have to be made.
But if we are not up to it, we will lose our independence, as the countries of the EU have lost theirs.
Specifically, we need to shift taxes off goods produced in the USA, and impose taxes on goods imported into the USA.
As we import nearly $2.5 trillion in goods, a tariff on imported goods, rising gradually to 20 percent, would initially produce $500 billion in revenue.
All that tariff revenue could be used to eliminate and replace all taxes on production inside the USA.
As the price of foreign goods rose, U.S. products would replace foreign-made products. There's nothing in the world that we cannot produce here. And if it can be made in America, it should be made in America.
Consider. Assume a Lexus cost $50,000 in the U.S., and a 20 percent tariff were imposed, raising the price to $60,000.
What would the Japanese producers of Lexus do?
They could accept the loss in sales in the world's greatest market, the USA. They could cut their prices to hold their U.S. market share. Or they could shift production to the United States, building their cars here and keeping their market.
How have EU nations run up endless trade surpluses with America? By imposing a value-added tax, or VAT, on imports from the U.S., while rebating the VAT on exports to the USA. Works just like a tariff.
The principles behind a policy of economic nationalism, to turn our trade deficits, which subtract from GDP, into trade surpluses, which add to GDP, are these:
Production comes before consumption. Who consumes the apples is less important than who owns the orchard. We should depend more upon each other and less upon foreign lands.
We should tax foreign-made goods and use the revenue, dollar for dollar, to cut taxes on domestic production.
The idea is not to keep foreign goods out, but to induce foreign companies to move production here.
We have a strategic asset no one else can match. We control access to the largest richest market on earth, the USA.
And just as states charge higher tuition on out-of state students at their top universities, we should charge a price of admission for foreign producers to get into America's markets.
And -- someone get a hold of Sen. Graham -- it's called a tariff.
Why?
Because to the GOP-E, their constituency are BIG CORPORATIONS, not the American worker. See -> Immigration
Buchanan is correct; he has always been correct on trade and culture. But now, conservatism has been constrained to include only free trade and the de-industrialization of the United States. Just listen to Mark Levin.
If Europe throws IMPORT DUTIES on American exports to Europe, then we subsidize those extra duty costs to those American exporters to Europe with the Duty Revenue that we impose on their EUROPEAN IMPORTS. We’ll see who the stronger economy is.
If America goes to WAR under TRUMP, it will go in to WIN!
My guess is that they are afraid that their the dollar’s status of being the reserve currency may be threatened. The U.S. dollar being the reserve currency, means they can spend like drunken sailors on a binge.
My guess is that they are afraid that the dollar’s status of being the reserve currency may be threatened. The U.S. dollar being the reserve currency, means they can spend like drunken sailors on a binge.
I agree. Everyone needs to read the line about trade deficits SUBTRACTING from Gross Domestic Product.
If unbalanced trade is so great, as these gop lackeys try to claim, then why on earth do economic experts SUBTRACT that from GDP?
In other words, it HURTS GDP.
Does Flake see no correlation between America’s decline, China’s rise, and the $4 trillion in trade surpluses Beijing has run up at the expense of his own country?
Come on Pat, you know as we all do, that they have been trying to destroy this Country and build up our enemies for a long long time. Every trade deal to come down the pike in the last 30 years had that as their stated goal.
They are Just plain Evil, and Hate America, Freedom, and everything it stands for, accept it and act accordingly.
But you are correct Mr Buchanan!
Amazing article, and 100% right. IN reality, there is no “free trade” - we have massive barriers elsewhere and almost none here.
Love it or leave it.
Excellent article. Thanks for posting it!
It is the perfect rebuttal to all the GOPe fear mongering re President Trump’s proposal of tariffs with countries which tariff our products.
They are afraid of tariffs for much the same reason street walkers dont like street preachers.
The big corporations are global and not American.
They control the Deep State and a strong and economically vibrant America scares the hell out of them.
I hope some of FR’s Free Traders will post against this article, and refute this recommendation for a Mercantilist USA.
Let’s argue this subject from an OUTCOME perspective. Not unlike Reagan’s election argument “If you are better off than 4 (or even 40) years ago...”
Yet, the Free Traders argue as if their viewpoint is PROVEN.
It has never been proven. Free Trade has never existed in the history of man.
So, we have two proven outcomes, one where the US abandons most tariffs and opens it’s markets to the Mercantilists without cost, and one where we are the predatory Mercantilist perusing the most favorable outcome to us.
Which one worked best for the American people?
Trump is able to do a 180 if something he does turns out wrong. I expect him to change is attitude on tariffs and tax cuts if they aren’t working (though he needs congress for tax changes). Most politicians won’t do a 180 for a variety of reasons so they don’t even want to see their theories tested.
Trump is testing their theory on tariffs, and we may find out they have been wrong - especially if done as part of a larger economic and diplomatic effort which Trump is likely to implement well. Once shown to be wrong in one thing, people may question other statements anti-tariff politicians and economists make.
It’s a little like Pelosi’s fear of tax cuts. We’ve had an economic argument and elections for 2 decades based on simple quotes that both sides campaign on (”tax cuts for the rich”, “voodoo economics”, “a rising tide lifts all boats”...) Dems are fine battling it out with words since 1/2 the country believe their words (republicans are fine with that too). The tax cuts are testing the words. And if they’ve been wrong on tax cuts, what else could voters think they’ve been wrong on? Pelosi would be happy if her constituents get more money - but not if it causes them to stop believing Dems economic objectives.
It is nice to see that someone else gets that value of "seignorage" as it is called. When we print dollars it is a tax not just on Americans, but a tax on the whole world.
Broad tariffs like the ones the EU imposes are one thing, and they can be argued on their own merits and deficiencies. But targeted tariffs that only apply to certain products and (especially) raw materials are a whole different story. They effectively pit one U.S. industry against another, depending on who is producing something protected by a tariff and who is buying it for their own manufacturing process.
Buchanan's example of a $50,000 Lexus with a 20% tariff is a perfect case in point. Why would a Japanese automaker relocate its production facilities to the U.S. to avoid this 20% tariff if the cars they build here are either going to be: (1) built using more expensive domestic parts and raw materials, or (2) built with imported materials that will be subject to their own tariffs anyway?
Because the GOPe and deep staters don't want another bigly Trumpian WIN.
The other benefit to tariffs is that they can be used to pay for large cuts to income and corporate taxes. When deficit hawks ask how Trump intends to pay for his tax cuts and infrastructure expenditures, his answer should be “import duties.” For over the first century of US history, tariffs accounted for much of the Federal Government’s revenue.
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