If Media, Dems, RINOs Are Breathlessly Opposed, Tariffs Might Be a Good Thing

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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.

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.

5 COMMENTS

  1. The globalists are trying to draw a line in the sand and block Trump from any future initiatives. They already have Trumped legally entangled. There goes the Flake, again supporting unconstitutional laws. Cohn fortunately had almost no influence in any Trump policies. These people who suddenly portray themselves as economic purists have supported numerous and expansive interference in our markets by the government for many years. They have no credibility. Cohn also thought he was an expert in climate policy? Really? That’s science.

  2. Tariffs on steel are a tax on all manufacturers who use steel and all consumers who buy products using steel. GWB’s steel tariff resulted in major job losses. Mercantilism is bad policy. I fervently hope that Trump is using the threat of tariffs as a bargaining chip in negotiations and will eventually abandon them. Protectionism harms most Americans, benefits the few.

    • I am not hopeful either. Trump does seem to have good instincts — maybe he knows something we don’t. Ruining our aluminum and steel industry is unacceptable.

  3. Some would like to refer to Milton Friedman as the standard for economic “theory”. His analysis on trade falls into the “theoretical” category in the perfect environment. In theory, in a perfect world, where no other factors are involved those principles seem reasonable. This was predicated during a time when the US was an economic powerhouse. A deeper analysis suggests this isn’t the case. Friedman also believed in a unilateral disarmament in trade tariffs. He “assumes” this would result in better economics. Furthermore, he blames consumers for disparities in trade.

    We have basically played by those rules since he made those statements. The result hasn’t panned out as believed. When a country, China, can base an economic system on feudalism / serfdom in production there is, by design, an advantage in the marketplace. Because of significant reduction in costs, manufacturers will gravitate to those locations to maintain the competitive edge, and Friedman agrees competition is the driving force. The labor market will decline in This country since the once higher paying jobs, as in steel, are the “Export”.

    Because of the decline of the labor market the “consumers” are, by design, without choice in applying their lower standard of living to elevate foreign markets because of “costs”. Economic power is taken from them and given to foreign markets. This would continue to “spiral down” in the same rhetorical statement as “dumbing down”.

    There is a point in economics when reaching for the bottom in costs and the highest in returns will reach a crescendo that is nearly impossible to recover from. In everything there needs to be a balance. In one sense it was the rise of serfdom that became the result and eventually the rise of unions. In our times it is an issue that will be extremely difficult to counter because of a single word, “power”. There has never been the consolidation of economic power as it is today. Companies are now “conglomerates” that wield massive economic And political power the world has never seen. This was a concern in the late 19th Century and termed “social Darwinism”. At that time, though, the power wasn’t concentrated enough to be a global issue whereas today it is.

    Some of the thinking might be attributed to a belief that corporations are altruistic in nature and only seek to make reasonable profits. But when economic power is centralized that power will translate into matters of “will”. When individuals reach a pinnacle in power they surmise all they believe is “best” for mankind and its future. In our time we are confronted with the stark reality of “success”. They are Google, Facebook, Twitter, Apple, Amazon and certainly others. The inevitable result is “I’m right, you’re wrong, Now shut up!”. We haven’t even considered the AI aspect in all this. THAT is the next stage.

  4. An interesting comment by one writer:

    There is no historical reason to assume that this position defines traditional Republicanism or a conservatism. Such an assumption is a perfect example of what may be called “litmus test conservatism.” A particular position becomes “conservative” because the donor base of what calls itself the conservative movement want its beneficiaries to advocate for it. We are fully justified in questioning free trade as such a litmus test.

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