Is it protectionism to fight for American manufacturing with the same taxes and tariffs our international competitors use against us? When the world walks all over us with an $800 billion trade deficit, what do you call that?
George W. Bush put tariffs on Chinese steel. Barack Obama put tariffs on Chinese steel. Hillary said she would put tariffs on Chinese steel. Why is it so traumatic when President Trump does it?
Economic adviser Peter Navarro said our aluminum industry will be gone in one or two years if we don’t do this and steel isn’t far behind. The President has repeatedly said he is not a protectionist and only seeks fair and reciprocal trade. Whether these tariffs will do that is not clear.
Senate GOP RINOs like Jeff Flake hope to pass a bill to block the President, but Steve Mnuchin says tariffs will happen. Canada and Mexico will likely be exempt.
— FOX Business (@FoxBusiness) March 7, 2018
Some history of the tariff
The main goal of the tariff was money to pay the federal budget. Tariffs were the largest (approaching 95% at times) source of federal revenue until the Federal income tax began after 1913. Since the 1940s, foreign trade policies have focused more on reciprocal tariffs and low tariff rates rather than using tariffs as a significant source of Federal tax revenue.
The goal of using higher tariffs to promote industrialization was urged by the first Secretary of the Treasury, Alexander Hamilton, and after him the Whig Party. They generally failed because Jeffersonian and Jacksonian Democrats said the tariff should be only high enough to pay the government’s bills; otherwise, it would hurt the consumers. The Republicans, however, made high tariffs the centerpiece of their economic policy beginning in 1861, and as late as 1930. Since 1930, tariffs had not been a major political issue.
In the 1980s, the GOP and Reagan went for a philosophy of minimal trade barriers and denounced restrictions as protectionism. Unfortunately, our trading partners are getting an extraordinary advantage at this point. In some cases, it’s because of agreements that date back to World War II.
In 2000 Clinton worked with Republicans to give China entry into WTO [World Trade Organization] and “most favored nation” trading status (i.e., the same low tariffs promised to any other WTO member). NAFTA and WTO advocates promoted an optimistic vision of the future, with prosperity to be based on intellectuals skills and managerial know-how more than on routine hand labor.
It has negatively impacted jobs and salaries as well as the manufacturing sector at this point.
Why Gary Cohn left and who will take his place
Axios reports that Gary Cohn felt he was “working at like 20 percent of my capacity” and he wanted another big job like the tax cuts he fought for. Infrastructure is dead but that wasn’t going to satisfy him. If he could be put in a position that used 80% to 90% of his capacity he would stay, he told the President.
Then the tariff question came up. Cohn was allegedly embarrassed because he told his Wall Street friends he had that in hand.
Although Cohn is a globalist, he is an important link to investors and much of corporate America, according to Politico.
Mike Allen of Axios said Cohn was planning to resign last week but several others were leaving that week.
CNBC senior contributor Larry Kudlow is one name being mentioned as a replacement. He agrees with Cohn on tariffs and urged him to not resign.
Other possible contenders for the position are: Kevin Warsh, former Fed governor and economic official for President George W. Bush; Shahira Knight, Deputy Assistant to the President for Economic Policy, Cohn’s top tax official; Peter Navarro, White House trade adviser, who argued for tariffs.
President Trump believes many talented people will be eager to take the job.
There is one very good sign in all this. If Democrats, RINOs, and the media are so breathlessly opposed to Trump imposing these two tariffs, that’s reason to be optimistic.