A Good Alternative to Tariffs: Both Trump and Biden want tariffs. But here is a better way to boost the economy

President Biden has called for increasing tariffs on imports of steel from China. President Trump has also called for increasing tariffs on all goods from China. Although these tariffs may help with shifting some demand to United States steel, there is a cost involved to the consumer: inflation. The economy was strong during the Trump administration, but Forbes analyzed the effect of tariffs during that time. The conclusion was mixed, but the tariffs may not have been as positive as originally believed.

Most economists agree that tariffs don’t always produce a boost in U.S. manufacturing. In addition, the cost of goods to consumers usually increases, while at the same time, there could be no significant creation of jobs. Experts point out that there could be a host of cost increases to more than just steel, including the price of electric vehicles, solar cells, batteries, battery materials, cranes used at ports, and certain medical supplies.

A better alternative to tariffs would be a modification of the Investment Tax Credit (ITC).

The origin of the Investment Tax Credit

Much is made of President John F. Kennedy’s tax cuts and the improved economy that followed. Yes, Kennedy lowered the tax brackets, dropping the top rates for individuals from 90 down to 70 percent, and corporate rates were lowered only to 48 percent from 52. What is lost in the discussion is the real stimulus that affected the growth of the economy of the 1960s.

President Kennedy noticed that the Japanese economy rebounded from the effects of World War Two at a very quick pace. He investigated and concluded that the Investment Tax Credit (ITC) was the reason for the Japanese recovery.

;The Kennedy tax reform not only cut the tax rates; he gave an added incentive for investment in new equipment. This resulted in an increase in investment and, as a result, increased productivity and a much improved economy.

What was the Investment Tax Credit?

The ITC was a credit given to investors (businesses) for purchases of tangible property. The property had to be personal property (IRS §1245) as opposed to real property (IRS §1250). Real property is real estate and land. Personal property is equipment that is movable and not part of a fixture to real property.

The ITC was a credit from taxes. That is, it was not a deduction from income, but a direct credit. This deduction was also exclusive of depreciation allowances. In other words, it did not affect the book or tax value of the property. Depreciation was still calculated on the cost basis of the asset.

Anything to avoid re-industrializing the United States.

Instead of sending $200 bil to Ukraine as an “investment” in defeating the Russians, they should have taken $30 bil and built three integrated steel mills, and ended all steel imports.

But No ! That would be “socialism” and “too expensive”.

So instead they piss away 10x as much $$$ in Ukraine and have nothing to show at the end.

Milton Friedman’s arguments against tariffs do not take into consideration the fact that some things must be made at home and not by a likely enemy in order to maintain sovereignty. Computer chips, some food staples, a minimum of energy, industry metals (if you have them to mine, and we mostly do), finished steel, etc.

It is not primarily an economics argument, though there could be economics components to it.

Sorry bunch of BS.

Tariffs are absolutely the right solution, especially when you have foreign governments subsidizing their manufacturing and dumping the products here.

Letting us consumers fund hostile regimes is idiotic.

If there was ever a lost opportunity in the post war era it was the embracement of free trade alliances rather than bilateral agreements where developing and repressive regimes could be forced to embrace egalitarianism and democratic principles in exchange for market access.

I am generally supportive of tariffs, but tariffs targeted at specific commodities or products are one of the dumbest ideas to come down the pike. The Trump administration tariffs on steel and aluminum — while I understood them for their political value — had an overall negative impact on the U.S. economy (more on that later).

If the U.S. determines that tariffs on imports from a specific country are necessary as a matter of policy, then it should be a flat tariff rate on everything that country exports here. None of this crap where some products have a tariff of X%, others have a tariff of Y%, etc.

One problem with tariffs in general is that as manufacturing gets more complex, costs of raw materials and assembled components of finished products matter more. One of the big Asian auto manufacturers (Mazda, I believe) canceled a plan to build a new plant here in the U.S. over the Trump tariffs on steel and aluminum. That’s because the higher price of these raw materials made it more expensive to manufacture cars here. So the U.S. was able to protect steel and aluminum producers here, but at the cost of harming the industries that rely on steel and aluminum.

What we need to do is tariffs on any goods made in hostile countries (China for instance), give tax breaks to any business who'll invest (build a factory) in the US (depressed areas would get a tax break that is more than if you build the factory in the south) and start ups would get more tax breaks than a big business.

Why are we giving $$$ to China? I try to buy American. I just got a new bicycle for my 8 year old. I bought a BCA (Kent brand) bike. It was built in the US with Chinese made parts. Good bike.

So Chinese companies will buy some U.S. companies, do assembly here, and take the ITC.

I have a better idea. No Tariffs. Just no trade with China or any other dictatorship of any kind. And no person or entity from any dictatorship of any kind can buy or own anything in the U.S., not property or businesses. Third, no U.S. “non-profit” enterprise can recieve money, directly or indirectly for any person, organization, business or governmental unit from any dictatorship of any kind. Cut off the heads of the snakes.

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