The Navarro Tariffs are Too High

As I thought, President Trump is off to a great start thanks to the much better team of people he now has compared to last time. One exception: he brought back Peter Navarro, allowing him to design the massive April 2nd tariff orders. Dr. Navarro for most of his career was a Hillary Clinton Democrat who promoted terrible economic ideas, just like fellow Ph.D. economist Paul Krugman.

His obsession is protective barriers that will bring back manufacturing to America, especially autos. But he is about 50 years behind the times. He still thinks it’s 1970 and Japan and Germany, with brand new factories, are flooding the world with cheap, well-made cars.

Times have changed. Basic economics dictate most vehicles today are made in the part of the world where they are sold. Japanese and German car makers long ago realized it’s cheaper to build in North America, in non-union plants, to supply our market. Most of our imported cars actually come from other North American countries -- Mexico and Canada. Thanks to free trade agreements, almost all American goods easily cross these borders both ways.

In fact, American manufacturers are so integrated with our neighbors, recent tariff scheme is shutting down American car plants as supply chains are disrupted.

Navarro makes a misleading defense of his position by saying the real money in autos is in drive trains -- engines and transmissions -- and these are much more likely to be imported. Well, sort of, but not a big deal. The real profit center is with the white-collar engineers who come up with the technology -- in offices, not factories, in Detroit, Tokyo, or Germany.

It’s also hard to physically make engines here, partly because of environmental regulations for casting steel and aluminum

THE AUTHOR MAKES THE FOLLOWING OBSERVATIONS:

In fact, most of Navarro’s across-the-board tariffs don’t seem aimed at any obvious problem. We run trade surpluses with lots of big countries -- Britain, Brazil, Netherlands, Spain, Australia, and Saudi Arabia, yet they all get hit with his 10% minimum tariff. Why? We should be rewarding every country where we have a surplus or near surplus; they are obviously wide open to us.

Second, look at this list of countries that are hardest hit by his tariffs. Most are insignificant traders, like North Macedonia. Why bother with a punitive tariff for them? They aren’t stealing any jobs and are in no condition to buy much from us, anyway.

Donald J. Trump
@realDonaldTrump

We have massive Financial Deficits with China, the European Union, and many others. The only way this problem can be cured is with TARIFFS, which are now bringing Tens of Billions of Dollars into the U.S.A. They are already in effect, and a beautiful thing to behold. The Surplus with these Countries has grown during the “Presidency” of Sleepy Joe Biden. We are going to reverse it, and reverse it QUICKLY. Some day people will realize that Tariffs, for the United States of America, are a very beautiful thing!

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