Why President Trump Must Be Careful With Tariffs
By, Chris Rossini (@chrisrossini)
Tariffs are on the minds of many Americans, and it’s very easy to understand why. Just go to any major retail store and check as to where each product was made. That’s why tariffs are a hot issue.
Of course, there’s nothing wrong with purchasing items from other nations. Our lives are made richer and easier by doing so. But if you ask yourself “What is manufactured here in America?” … it’s easy for your mind to go blank.
The answer is: "Not much."
In fact, I don’t know a single person (friend or relative) who is involved in manufacturing. I’d have to go back to my late grandparents generation to find someone that I know who actually made things.
So it’s understandable to want to react against this very unnatural economic situation in America.
But...
We must be careful in how we react. Many of us remember that there was a very strong desire to react after 9/11. But the reaction of invading Iraq created one of the biggest economic, moral and geopolitical disasters in our nation’s history!
America needs to be smart and assess the situation as accurately as possible.
Tariffs have been involved in some of our nation’s darkest times. There was the Morrill Tariff of 1861 that led directly to Southern secession and consequent war. There was also the Smoot-Hawley Tariff of 1930 and the Great Depression that immediately followed.
Tariffs are serious business, that come with serious consequences.
First, there is the crony capitalist problem. Government gets intimately involved in picking and choosing which companies will benefit from tariffs, and which won’t.
Whenever government starts to shower benefits on corporations (or individuals) there is strong tendency for those benefits to become perpetual; for them to never end.
Calling something “temporary” does not make this problem go away. There’s a saying that ‘Nothing is more permanent than a temporary government measure.’
Tariffs can start to feed on themselves and lead to a very dark place. The great French economist Frederic Bastiat said: “When goods don’t cross borders, soldiers will.” We definitely don’t want that. Our nation has been bled dry by never-ending war.
Next, there is the problem that the tariffs are paid by the American consumer (not China, and not the EU). It’s the American consumer that pays the tariff tax.
President Trump does not have the power to tax China. If he mailed them a tax bill, they wouldn’t pay it. It would go uncollected.
The U.S. government does, however, have the power to tax Americans; and they'll make sure it's collected.
So, we the American people will pay the tariff, which means more of our money will be sent to DC for them to either waste themselves (or more likely) re-route to Ukraine or Israel, on even more war.
At this moment in time, does “we need to send more money to DC” seem like a great idea to you? It certainly doesn’t to me. I want to keep more of my money and spend it on important things for my family.
The main problem in America is that we have the biggest government in the history of the world. You cannot have a free and thriving society at the same time.
And we don’t!
The solution is not to find ways to tax us more, but to cut the government down in size … DRASTICALLY!
It is a great positive that President Trump (@realdonaldtrump) plans on hiring Elon Musk (@elonmusk) to come in and clean house. This is of supreme importance! The entrepreneurial spirit of America has been buried under more red tape than can be imagined.
My father, as a kid in Philadelphia, bought and sold all types of items on the streets (soft pretzels come to mind). You were an entrepreneur throughout our history, just by being born here! No one was going to stop you!
Today, you need a license to open a lemonade stand. You need to spend money on degrees that won't recoup the money that you spent.
The bureaucratic zombie has destroyed American entrepreneurship. But it’s not just the bureaucrats. It’s also their corporate zombie “partners.”
Big Corporations love the government because the government gives them advantages. The government will subsidize them, create barriers to entry (licensing), force people to use their products (covid “vaccine” mandates) and even blatantly put small competition out of business (covid lockdowns).
This must be considered when further entrenching corporations to government via tariffs. They will certainly abuse them for their own benefits.
Now, reality must be acknowledged.
President Trump appears to be set on tariffs no matter what words are printed here, or what arguments are made.
With that being the case, the best advice that can be given is:
Be very careful.
Mike