Tariffs -- The Taxes That Made America Great

Patrick J. Buchanan over-eggs the pudding below.  He writes as if tariffs are uniformly desirable.  They are not.  Tariffs are always a tradeoff.  You sacrifice low prices in Wal-mart for some other objective -- maintaining defence related industries at home, for instance.  Economists have always recognized that.  Buchanan is not the bearer of some new revelation.  If your defence relies heavily on cutting edge aerospace industries, for instance, it is reasonable and proper to ensure that the products it uses are available at home.

That is in fact an area where successive administrations have been remiss.  Rare earth minerals are vital in modern electronic devices.  So what is the main source of them at the moment?  China!  How crazy can you get?  America has plenty of such minerals in the ground so it is only a matter of the miners being able to make a buck getting them out of the ground for all America's needs in that area to be produced locally.  A tariff on the import of such minerals from China would achieve that objective.

Mr Trump has articulated very clearly why and how he uses tariffs -- which he in fact does sparingly.  He wants fairer trade with China -- so that they stop trying to keep American goods such as motor vehicles out while their goods come freely into America.  His second objective is to avoid the social disruption that happens when a whole industry suddenly dies -- which has happened at various places in the mid-West.  He wants transitions to be gradual rather than sudden so that the people affected have time to adjust.

Both those objectives are perfectly rational and no surprise to the economics profession.  The important thing is that you have a clear idea of what you want to achieve in levying tariffs.  Mr Trump has a crystal clear idea of that.  Levying tariffs willy-nilly would be a great folly. The historical tariffs Buchanan talks about fall into the well-known "infant industry" exception to free trade. Old hat among economists


As his limo carried him to work at the White House Monday, Larry Kudlow could not have been pleased with the headline in The Washington Post: "Kudlow Contradicts Trump on Tariffs."

The story began: "National Economic Council Director Lawrence Kudlow acknowledged Sunday that American consumers end up paying for the administration's tariffs on Chinese imports, contradicting President Trump's repeated inaccurate claim that the Chinese foot the bill."

A free trade evangelical, Kudlow had conceded on Fox News that consumers pay the tariffs on products made abroad that they purchase here in the U.S. Yet that is by no means the whole story.

A tariff may be described as a sales or consumption tax the consumer pays, but tariffs are also a discretionary and an optional tax.

If you choose not to purchase Chinese goods and instead buy comparable goods made in other nations or the USA, then you do not pay the tariff.

China loses the sale. This is why Beijing, which runs $350 billion to $400 billion in annual trade surpluses at our expense is howling loudest. Should Donald Trump impose that 25% tariff on all $500 billion in Chinese exports to the USA, it would cripple China's economy. Factories seeking assured access to the U.S. market would flee in panic from the Middle Kingdom.

Tariffs were the taxes that made America great. They were the taxes relied upon by the first and greatest of our early statesmen, before the coming of the globalists Woodrow Wilson and FDR.

Tariffs, to protect manufacturers and jobs, were the Republican Party's path to power and prosperity in the 19th and 20th centuries, before the rise of the Rockefeller Eastern liberal establishment and its embrace of the British-bred heresy of unfettered free trade.

The Tariff Act of 1789 was enacted with the declared purpose, "the encouragement and protection of manufactures." It was the second act passed by the first Congress led by Speaker James Madison. It was crafted by Alexander Hamilton and signed by President Washington.

After the War of 1812, President Madison, backed by Henry Clay and John Calhoun and ex-Presidents Jefferson and Adams, enacted the Tariff of 1816 to price British textiles out of competition, so Americans would build the new factories and capture the booming U.S. market. It worked.

Tariffs financed Mr. Lincoln's War. The Tariff of 1890 bears the name of Ohio Congressman and future President William McKinley, who said that a foreign manufacturer "has no right or claim to equality with our own. ... He pays no taxes. He performs no civil duties."

That is economic patriotism, putting America and Americans first.

The Fordney-McCumber Tariff gave Presidents Warren Harding and Calvin Coolidge the revenue to offset the slashing of Wilson's income taxes, igniting that most dynamic of decades — the Roaring '20s.

That the Smoot-Hawley Tariff caused the Depression of the 1930s is a New Deal myth in which America's schoolchildren have been indoctrinated for decades.

The Depression began with the crash of the stock market in 1929, nine months before Smoot-Hawley became law. The real villain: The Federal Reserve, which failed to replenish that third of the money supply that had been wiped out by thousands of bank failures.

Milton Friedman taught us that.

A tariff is a tax, but its purpose is not just to raise revenue but to make a nation economically independent of others, and to bring its citizens to rely upon each other rather than foreign entities.

The principle involved in a tariff is the same as that used by U.S. colleges and universities that charge foreign students higher tuition than their American counterparts.

What patriot would consign the economic independence of his country to the "invisible hand" of Adam Smith in a system crafted by intellectuals whose allegiance is to an ideology, not a people?

What great nation did free traders ever build?

Free trade is the policy of fading and failing powers, past their prime. In the half-century following passage of the Corn Laws, the British showed the folly of free trade.

They began the second half of the 19th century with an economy twice that of the USA and ended it with an economy half of ours, and equaled by a Germany, which had, under Bismarck, adopted what was known as the American System.

Of the nations that have risen to economic preeminence in recent centuries — the British before 1850, the United States between 1789 and 1914, post-war Japan, China in recent decades — how many did so through free trade? None. All practiced economic nationalism.

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On China, president Trump is working for America — not big business

Will Washington do what’s in the interest of the nation or what’s in the short-term interest of Wall Street and a small number of businesses? That’s the central question in our trade relations with China.

The Trump administration has chosen to do what’s in the national interest.

Twenty years ago, Congress voted to establish permanent normal trade relations with China, giving the communist regime in Beijing the same preferential trade treatment we accord our best allies, Western industrial democracies such as Great Britain and Germany.

In doing so, Washington gave multinational corporations the long-term certainty they needed to make massive investments in the People’s Republic of China and replace well-paid American workers with poorly paid Chinese workers by moving factories from Michigan to Shenzen.

The late Sen. Jesse Helms, arch-conservative from North Carolina, opposed the measure.

Helms told his fellow senators, “There’s no question that giving permanent most favored nation trade status to China may advance the business interests of various sectors of the U.S. corporate community, but the Senate, amidst all the high pressure tactics, must not confuse business interests with the national interest of the American people.”

His warning was prescient.

Unfortunately, Washington didn’t take it, and instead confused business interests with the national interest.

Policymakers convinced themselves that as China grew more prosperous it would become a democratic, free market ally of the U.S.

It hardened into an article of faith that what’s good for China is good for America. Vice President Joe Biden voiced that sentiment perfectly when he said, “It is overwhelmingly in our interest that China prosper.”

As global corporations left heartland America where they were born and grew up to relocate to China, corporate profits soared while the Americans they left behind sank into unemployment, depression, alcoholism and drug addiction.

And the companies who did business in China became China’s lobbyists in Washington.

These companies, fearing reprisals from China’s all-powerful communist party bosses if they spoke up, asked Washington to remain silent while Beijing hacked our computers, stole our government, military and trade secrets, and reneged on promises to open its market.

Putting business interests before national interest, Wall Street and Washington consultants made fortunes for themselves arranging business deals in, with, or on behalf of China even as the Chinese Communist Party built a world-class military, persecuted people of faith and widened its espionage and influence operations inside the U.S.

Now China is doing openly what it long did behind closed doors:  ask American businesses to push Beijing’s party line in Washington.

Narrow self-interest and fear of Beijing’s commissars motivates the import lobby and other business entities who ask President Trump to immediately drop tariffs on China’s illegally subsidized imports and make a deal, any deal, with China now now now.

Keep that in mind when you see critics of the administration’s policies wringing their hands and gnashing their teeth about “the impact tariffs have on consumers.”

These critics showed no concern when American producers — the working men and women of this country — were stripped of their jobs and their ability to earn a living and support a family and were reduced to simply consumers on the welfare rolls.

These critics who voice faux concern over “consumers pay the price of tariffs” ignore the facts and the evidence. In fact, inflation is virtually flat.  The evidence shows outsourcing jobs to China has caused a drop in Americans’ disposable income that more than offsets any illusory gain from nominally cheaper imported goods.

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Russia Calls On Pompeo For A Reboot: “Let’s try, and see what happens…”

The Donks have made a demon out of Russia for their own anti-Trump purposes but there is no reason why the administration should follow suit

Russian Foreign Minister Sergei Lavrov told U.S. Secretary of State Mike Pompeo on Tuesday it was time for Moscow and Washington to put aside years of mistrust and find a way to work together constructively.

Pompeo is in the Russian Black Sea resort of Sochi for talks with his Russian counterpart, and later on Tuesday will also hold consultations with Russian President Vladimir Putin.

Ties between the two countries have been poisoned by allegations – denied by Moscow – that Russia tried to influence the results of the 2016 U.S. presidential election, and by differences over Venezuela, Iran, Syria and Ukraine.

“We see that there are suspicions and prejudices,” Lavrov told Pompeo at the start of their talks.

“This hinders both your security and our security and causes concern around the world. We think it is time to build a new and more constructive matrix for our relations,” Lavrov said.

“We are ready to do that if our U.S. colleagues are ready to reciprocate. …Let’s try, and see what happens.”

Pompeo’s visit represents the first high-level contact between Moscow and Washington since U.S. Special Counsel Robert Muller submitted a report examining the nature of Russia’s role in the 2016 U.S. presidential election.

His inquiry had cast a pall over U.S.-Russian relations, and Russian officials had expressed hope that Washington would have more scope to build friendlier relations with Moscow once it was out of the way.

Responding to Lavrov’s opening remarks, Pompeo said: “I’m here today because President Trump is committed to improving this relationship. We have differences and each country will protect its own interests, look out for its own interests of its people.”

“But it’s not destined that we’re adversaries on all issues and I hope that we can find places where we have a set of overlapping interests and continue to build out strong relationships, at least on those particular issues,” Pompeo said.

Pompeo identified counter-terrorism and combatting nuclear proliferation as two areas where Moscow and Washington could find common ground.

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Ken Blackwell: The President’s Promises, Made and Kept

During the 2016 election, President Trump made plenty of campaign promises, as does any candidate. But this president has done what his predecessors often fail to accomplish: he has kept his promises.

Perhaps the president’s most important accomplishment so far is his restoration of the judicial branch—a big reason many otherwise wary voters supported him in 2016. You probably already know about his two appointees to the Supreme Court, Neil Gorsuch and Brett Kavanaugh, who are poised to make sure that the Constitution isn’t a rubber stamp for progressive policy preferences but a document whose meaning endures over time. But those justices are only the beginning: the Senate has confirmed more than one hundred judges to lower court positions in both the United States Circuit Courts and the Federal Court of Appeals.

Of course, refreshing our third branch of government isn’t the only success Trump has under his belt. We shouldn’t forget the phenomenal trade policies Trump has instituted, nor the agreements he’s renegotiating. Trump has revised NAFTA and implemented the United States-Mexico-Canada Agreement, a better trade deal that strengthens America’s job-creating ability. President Trump has also renegotiated trade agreements with South Korea to protect American companies. And while previous presidents have talked tough on China, Trump is backing his talk up with action. This administration has made aggressive moves to stop the trade abuses we suffer from China and finally level the playing field. Trump just raised the tariffs on China from 10 percent to 25 percent, a measure that will curb our trade deficit with the communist nation. Thanks to these measures, the U.S. trade deficit fell to an eight-month low in February.

The controversial Paris Accords weren’t technically an economic agreement, but President Obama’s decision to sign on with this environmental agreement—a treaty in all but name—would have had serious economic repercussions. The accords are supposed to keep the global rise of temperature under two degrees Celsius, in part by participating nations pledging $100 billion a year to developing countries. But at what cost? The Heritage Foundation projected that the Accords would reduce the GDP $2.5 trillion by 2035. That is a high price to pay for very little promise of success in green energy and environmental restoration. Some of the chief polluters in the world are India and China, yet they would not have suffered under the same rigid sanctions as the United States if we signed the Paris Accords. President Trump was wise to get us out of this bad deal.

In the meantime, he teamed up with the GOP-controlled Congress to give a great deal to American taxpayers in the form of sweeping tax cuts. There was a vicious campaign by the left to smear the tax cuts, but even The New York Times had to admit that Americans of all income levels kept more of their hard-earned cash last year. For example, CBS News reports that there are now one million more job openings than unemployed persons. This growth and hiring ability are thanks to more money being available for businesses.

The Trump Administration and Republican leaders in the House and Senate should be congratulated for their accomplishments so far—though of course, there is plenty more work to be done. Consider the courts: despite the enormous success of the Trump administration to this point, there are still 159 current and known future vacancies. President Trump has already nominated 59 individuals to fill those seats, and the Senate should be working around the clock to make sure all their nominees are confirmed, despite the obstruction coming from the left.

And make no mistake: Democrats will find new ways to obstruct, even with their dreams of collusion and obstruction being dissolved with the Mueller Report. President Trump didn’t let that distraction block his promises to restore the judiciary, put America first, and rejuvenate the economy—and we can expect him to keep more promises in the years ahead.

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