Posted on 05/14/2019 3:37:59 AM PDT by Kaslin
As his limo carried him to work at the White House Monday, Larry Kudlow could not have been pleased with the headline in The Washington Post: "Kudlow Contradicts Trump on Tariffs."
The story began: "National Economic Council Director Lawrence Kudlow acknowledged Sunday that American consumers end up paying for the administration's tariffs on Chinese imports, contradicting President Trump's repeated inaccurate claim that the Chinese foot the bill."
A free trade evangelical, Kudlow had conceded on Fox News that consumers pay the tariffs on products made abroad that they purchase here in the U.S. Yet that is by no means the whole story.
A tariff may be described as a sales or consumption tax the consumer pays, but tariffs are also a discretionary and an optional tax.
If you choose not to purchase Chinese goods and instead buy comparable goods made in other nations or the USA, then you do not pay the tariff.
China loses the sale. This is why Beijing, which runs $350 billion to $400 billion in annual trade surpluses at our expense is howling loudest. Should Donald Trump impose that 25% tariff on all $500 billion in Chinese exports to the USA, it would cripple China's economy. Factories seeking assured access to the U.S. market would flee in panic from the Middle Kingdom.
Tariffs were the taxes that made America great. They were the taxes relied upon by the first and greatest of our early statesmen, before the coming of the globalists Woodrow Wilson and FDR.
Tariffs, to protect manufacturers and jobs, were the Republican Party's path to power and prosperity in the 19th and 20th centuries, before the rise of the Rockefeller Eastern liberal establishment and its embrace of the British-bred heresy of unfettered free trade.
The Tariff Act of 1789 was enacted with the declared purpose, "the encouragement and protection of manufactures." It was the second act passed by the first Congress led by Speaker James Madison. It was crafted by Alexander Hamilton and signed by President Washington.
After the War of 1812, President Madison, backed by Henry Clay and John Calhoun and ex-Presidents Jefferson and Adams, enacted the Tariff of 1816 to price British textiles out of competition, so Americans would build the new factories and capture the booming U.S. market. It worked.
Tariffs financed Mr. Lincoln's War. The Tariff of 1890 bears the name of Ohio Congressman and future President William McKinley, who said that a foreign manufacturer "has no right or claim to equality with our own. ... He pays no taxes. He performs no civil duties."
That is economic patriotism, putting America and Americans first.
The Fordney-McCumber Tariff gave Presidents Warren Harding and Calvin Coolidge the revenue to offset the slashing of Wilson's income taxes, igniting that most dynamic of decades -- the Roaring '20s.
That the Smoot-Hawley Tariff caused the Depression of the 1930s is a New Deal myth in which America's schoolchildren have been indoctrinated for decades.
The Depression began with the crash of the stock market in 1929, nine months before Smoot-Hawley became law. The real villain: The Federal Reserve, which failed to replenish that third of the money supply that had been wiped out by thousands of bank failures.
Milton Friedman taught us that.
A tariff is a tax, but its purpose is not just to raise revenue but to make a nation economically independent of others, and to bring its citizens to rely upon each other rather than foreign entities.
The principle involved in a tariff is the same as that used by U.S. colleges and universities that charge foreign students higher tuition than their American counterparts.
What patriot would consign the economic independence of his country to the "invisible hand" of Adam Smith in a system crafted by intellectuals whose allegiance is to an ideology, not a people?
What great nation did free traders ever build?
Free trade is the policy of fading and failing powers, past their prime. In the half-century following passage of the Corn Laws, the British showed the folly of free trade.
They began the second half of the 19th century with an economy twice that of the USA and ended it with an economy half of ours, and equaled by a Germany, which had, under Bismarck, adopted what was known as the American System.
Of the nations that have risen to economic preeminence in recent centuries -- the British before 1850, the United States between 1789 and 1914, post-war Japan, China in recent decades -- how many did so through free trade? None. All practiced economic nationalism.
The problem for President Trump?
Once a nation is hooked on the cheap goods that are the narcotic free trade provides, it is rarely able to break free. The loss of its economic independence is followed by the loss of its political independence, the loss of its greatness and, ultimately, the loss of its national identity.
Brexit was the strangled cry of a British people that had lost its independence and desperately wanted it back.
For my part, I will try not to buy China goods....which is almost impossible. In other words...I'm gonna stash my money until things get straightened out.
And to those former American companies....come on home.
Of course the problem is...we don't have the workers.
Maybe we shouldn't have aborted aka murdered...so many babies.
I thought Kudlow had come on board to prevent this...
The fungibility of trade goods. Most items of commerce may be made in different venues, and purchase of these goods may transition from China, which has a goodly part of its productivity capacity devoted to these export items, to other nations which may or may not also already have the capability of producing these trade goods. If these other localities already have the capability, then it is merely expansion of that capability to take over the slack caused by the contraction of the Chinese export market. If the capability must be developed, the time frame is a little more stretched out, but generally, within a year or so, the necessary capital will be made available and the substitute source will be up and running.
There are very few exportable goods of which China is the one and only source. And almost nobody wants to form a cartel, similar to OPEC, with China.
Straighten up and fly right, China. Or get out of our sky.
Sorry to have missed your post—I thought I'd be first! ;)
Anyway, you're correct of course. Now we have 100,000+ UNSKILLED WORKERS walking across our southern border—in March alone!)
≣≣8-O
Odd that Kudlow did not mention who ultimately pays when the other side of the equation runs high tariffs on us.
What will we pay with when China builds a larger military?
Good article, but why did the author feel it was necessary to lie. Kudlow admitted no such thing. He said that there is some spill over of increased costs to the consumer but most of the costs are borne by the producer in order to retain market share.
Prevent what?
I thought Kudlow’s answer came off as weak.
There is no labor shortage wages are not even keeping up with inflation.
An excellent article, thank you for posting.
Can’t you scream any louder?
I did too. He was not as forceful as usual. I thought he night have been ill.
It would be better if 100% of the tariff was paid by the consumer. That would promote domestic industry even further.
Do you want me to whisper?
I like the phasing-in effect. I do not want a backlash against POTUS. We need to create a niche for American manufactures to utilize, ie a price point at which they can compete.
Set up of a new factory or product line is not overnight. While China is trying to hold on, American manufacturers can gear up. Some of the trade will move to other Asian countries & India that are more willing to have reciprocal trade. POTUS is extricating us from a trap skillfully so that our farmers, consumers & economy have the least disruption.
We reaffirm our belief in the protective tariff to extend needed protection to our productive industries. We believe in protection as a national policy, with due and equal regard to all sections and to all classes. It is only by adherence to such a policy that the well being of the consumers can be safeguarded that there can be assured to American agriculture, to American labor and to American manufacturers a return to perpetrate American standards of life. A protective tariff is designed to support the high American economic level of life for the average family and to prevent a lowering to the levels of economic life prevailing in other lands.
In the history of the nation the protective tariff system has ever justified itself by restoring confidence, promoting industrial activity and employment, enormously increasing our purchasing power and bringing increased prosperity to all our people.
The tariff protection to our industry works for increased consumption of domestic agricultural products by an employed population instead of one unable to purchase the necessities of life. Without the strict maintenance of the tariff principle our farmers will need always to compete with cheap lands and cheap labor abroad and with lower standards of living.
The enormous value of the protective principle has once more been demonstrated by the emergency tariff act of 1921 and the tariff act of 1922.
We assert our belief in the elastic provision adopted by congress in the tariff act of 1922 providing for a method of readjusting the tariff rates and the classifications in order to meet changing economic conditions when such changed conditions are brought to the attention of the president by complaint or application.
We believe that the power to increase or decrease any rate of duty provided in the tariff furnishes a safeguard on the one hand against excessive taxes and on the other hand against too high customs charges.
The wise provisions of this section of the tariff act afford ample opportunity for tariff duties to be adjusted after a hearing in order that they may cover the actual differences in the cost of production in the United States and the principal competing countries of the world.
We also believe that the application of this provision of the tariff act will contribute to business stability by making unnecessary general disturbances which are usually incident to general tariff revisions.
So raising tariffs, is a tax on the American consumer? OK. I agree. So when China “retaliates” by raising taxes on American goods, it is a tax on the Chinese consumer. Right? I would hate to be the Chinese leader, that just made that bowl of rice more expensive, for three billion hungry Chinese. As for me, my next ZTE Android phone, will cost $85, and not $65.
Cry me a river.
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