A Trump Trade War Wouldn’t Put ‘America First’

March 6, 2018

by Jonathan Decker


President Trump rattled global markets this week after announcing his administration would pursue a new 25 percent import tariff on steel, and a new 10 percent import tariff on aluminum. To call a spade a spade — Trump’s tariffs amount to nothing less than a tax increase on American consumers. These tariffs will inevitably have a profound, negative impact on the U.S. economy, hence the negative reaction from the stock market.

That said… one amusing consequence of President Trump’s tariff announcement has been the left-wing media’s newfound support for tax-free trade. The liberal press has suddenly had an epiphany — they have discovered the immeasurable beauty of free markets!

Liberal media, welcome to the supply-side.

Vox recently ran an interesting column highlighting how Trump’s tariffs will be particularly painful because steel and aluminum are ubiquitous in American industries:

[S]o many American industries need steel and aluminum: They’re used to build cars, skyscrapers, roads, bridges, washing machines, refrigerators, and a whole host of other products. More expensive steel and aluminum means higher costs for the American businesses that make these products — higher costs that will likely get passed on to consumers. [Emphasis added]

Translation: Trump’s tariffs won’t be ‘sticking it to the other countries’ as claimed. We are the ones who are going to foot the bill. Americans will pay more for products as common as beer and soup as a result of this policy.

President Trump has responded to critics by claiming the trade wars are “good and easy to win”, but evidence has shown that is already not the case. European Commission chief Jean-Claude Juncker has already vowed retaliatory tariffs against U.S. exports stating, “We will now impose tariffs on motorcycles, Harley Davidson, on blue jeans, Levis, on Bourbon. We can also do stupid.”

And in response to Jean-Claude Juncker (presumably), President Trump threatened more tariffs, stating, “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.”

This tit-for-tat game of levying taxes on goods will only serve to drive up costs for consumers and make businesses less competitive. Contrary to President Trump’s assertion, nobody wins during trade wars.

At Fox News, CATO’s John Cochrane eloquently and succinctly explains why:

Tariffs are not good. Tariffs on steel hurt businesses that use steel, especially those that compete with imported products made of steel. Tariffs hurt consumers, who pay more for steel-using products. But perhaps the greatest damage is to the steel industry itself. Tariffs, like all protection, shield the industry from competition. And industries shielded from competition do not innovate, do not cut costs, do not make better products. Only when the Big Three faced import competition did they start to make better cars, and cut costs.

If it is good for each country to protect its businesses with tariffs, then it is good for each state to do the same, i.e. California should keep out those cheap Arizona surfboards. A key to U.S. prosperity is precisely our Constitution’s firm ban on state politicians’ desire to please local industries with protection.

As the stock market jitters show, raising taxes on all Americans (including 6.5 million in steel-consuming industries) in a misguided attempt to protect 140,000 actual steel workers will not put ‘America First.’ Even worse, the steel and aluminum tariffs invite the potential for retaliation from other nations, which will further the negative economic impact. Hopefully, Congress will use the upcoming omnibus bill as a vehicle to stop this tax hike from being implemented.


Jonathan Decker is the Chief Economic Correspondent for TheNationalPulse.com.

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