Trump goes all in on his tariffs
Trump is undoubtedly well outside the simple thinking of economic orthodoxy. Most economists think his policies would drive Americans into poverty. Economic development is however complex and they fail to note that, far from Trump being economically illiterate, Trump's degree is in fact in economics and comes from a prestige economics school. They particularly seem to overlook the economic growth that would result from a largely uniform 10% tariff.
They also overlook that history is on his side. There are at least two clear examples of high tariffs being economically beneficial. The first is that America prospered mightily in the 19th century behind a high tariff wall. That is normally attributed to an "infant industry" effect and is therefore not now relevant but it IS relevant. Major American industries have now laggged so far behind Asian industries that they could be said to have reverted to infant status
The second example isn't well known but Australia under R.G. Menzies in the '60s was also very comfortable behind a high tariff wall. For details of that, see:
http://jonjayray.com/trumpism.html
So Trump seems likely to get good economic results next time around tooIt seems like every time Donald Trump makes a public appearance, he promises yet another tax cut. Now he’s doing something similar with his cherished tariffs.
Interviewed by Bloomberg’s editor-in-chief John Micklethwait at the Economic Club of Chicago this week, Trump not only defended his plan to impose a 10 per cent baseline tariff on all imports to the US and a punitive 60 per cent tariff on imports from China, but doubled down.
Arguing that tariffs would not only raise hundreds of billions of dollars in deficit-reducing revenue from the exporting countries, but also provide an incentive to foreign companies to shift their plants to the US, he claimed that the higher the tariff, the more likely it was that companies would build their factories in the US to avoid it.
“In fact, I’ll tell you, there’s another theory, [it] is that the tariff, you make it so high, so horrible, so obnoxious that they’ll come right away,” he said.
“There’s two ways of looking at a tariff. You can do it as a money-making instrument, or you can do it as something to get the companies. Now, if you want the companies to come in, the tariff has to be a lot higher than 10 per cent, because 10 per cent is not enough. They’re not going to do it for 10 per cent.
“But you make a 50 per cent tariff, they’re going to come in.”
“All you have to do is build your plant in the United States, and you don’t have any tariffs,” he said, while threatening to apply high tariffs to imports of European cars, including Mercedes-Benz, to force them to build cars in the US.
He also threatened tariff rates of “100, 200, 2000 per cent” on cars from Mexico, which has a free trade agreement with the US and therefore could provide a back door to the US market.
“They’re not going to sell one car into the United States,” he said.
Trump rejects the consensus view of economists – and the actual experience of his 2018 tariffs on imports from China – that it will be US companies and consumers that pay the price, making them a form of consumption tax.
“We got hundreds of billions of dollars from China alone, and I haven’t even started yet,” he said.
He also thinks his tariffs will raise trillions of dollars to pay for his proposed tax cuts for companies and wealthy households, along with the abolition of taxes on tips, overtime, social security benefits, interest on car loans and credits for state taxes, despite estimates from credible authorities like the Peterson Institute for International Economics that the tariffs would raise only about $US200 billion ($300 billion) a year. The US government’s revenue base is close to $US5 trillion a year.
Most experts in trade policies believe Trump’s tariffs would damage the US economy and its relationships with the rest of the world, including America’s allies.
They also expect that, should Trump do what he has threatened, its trading partners will retaliate with tariffs of their own. The European Union has already drawn up a list of US goods to target.
Because he doesn’t understand how tariffs work, Trump thinks they are marvellous, a type of magic pudding that he can use to finance his ever-expanding list of tax cuts.
“The most beautiful word in the dictionary is ‘tariff’, and it’s my favourite word,” he said. “It needs a public relations firm to help it but, to me, it’s the most beautiful word in the dictionary.”
The Committee for a Responsible Federal Budget recently estimated that the Trump policy platform would add $US7.5 trillion to US deficits and debt over a decade, and potentially as much as $US15 trillion, but Trump is adamant that his mix of tariffs and tax cuts will generate growth and reduce the deficit.
“I was always very good at mathematics,” he said.
Most of the economic think tanks that have analysed Trump’s tax, trade and immigration policies have concluded they will shrink the US economy, potentially substantially, reduce employment, ignite a new wave of inflation and result in increased deficits and debt.
During his last term as president, Trump claimed his tax cuts and deregulation would generate economic growth of as much as 6 per cent a year. It peaked at only half that level and his policies, even if the impact of spending in response to the pandemic is excluded, resulted in a massive increase in government debt.
For Trump, however, facts and expert knowledge don’t matter. His gut instincts, genius and business experience give him superior insights.
If Trump does regain the presidency and can implement his policies, they will damage the US economy. The regressive nature of his tax and trade policies and the plan to detain and deport illegal immigrants means they will probably damage US society, too.
And the damage wouldn’t be confined to the US. Indeed, even though the policies would do material long-term harm to the US economy and households, it is likely his trade policies would be even worse for US trade partners’ economies and consumers, particularly (but not exclusively) China and the EU.
Last time he was in office, Trump threatened to sack Federal Reserve Board chair Jerome Powell for keeping US interest rates too high for too long (although it is doubtful he had that authority).
This time, he says he just wants to be able to have the ability to influence, rather than direct, monetary policy, although some of his former White House staff have been looking at options for more direct influence over the Fed.
“As a very good businessman and somebody that uses a lot of, uh, sense [...] I think I have the right to say, you know, I think I’m better than [Powell] would be. I think I’m better than most people would be in that position. I think I have the right to say ‘I think you should go up or down a little bit’,” Trump said.
“I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether or not interest rates should go up or down.”
It’s not surprising Trump thinks he could do a better job than Powell, given his apparently deep insight into the role and its demands.
“It’s the greatest job in government. You show up to the office once a month, and you say ‘let’s flip a coin’ and everybody talks about you like you’re a god,” he said.
That’s not a perspective on central banking that central bankers or monetary economists anywhere would share as they try to make sense of reams of economic and financial data to protect growth and the stability of their financial systems.
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The Real-World Consequences of Soft-on-Crime Prosecutors, Brought to You by George Soros
A first-of-its-kind documentary for The Heritage Foundation is the culmination of years of work, scholarship, live events, and debates, highlighting the radical nature of the George Soros-inspired rogue prosecutors movement—and the dire consequences to the safety and security of the residents and businesses in the communities overseen by so-called progressive prosecutors.
Told through the eyes of real prosecutors, real victims, and the radicals themselves who support this pro-criminal, anti-victim movement, “Rogue Prosecutors: The Full Story” paints a vivid portrait of how and why crime has risen in cities presided over by rogue prosecutors—and what you can do about it.
We coined the term “rogue prosecutors” in 2020 when we first exposed this toxic and dangerous social experiment. We started with a Daily Signal blog series on individual rogue prosecutors, among them George Gascon in San Francisco and Los Angeles, Larry Krasner in Philadelphia, Kim Foxx in Chicago and others.
We published research papers on how they sabotage the rule of law, implement policies that lead to rising crime rates, and ignore victims. We exposed the fact that there is a blue city murder problem. We published our book, “Rogue Prosecutors: How Radical Soros Lawyers Are Destroying America’s Communities,” and created an audio version of it on Audible.
We debunked the notion that the United States incarcerates “too many” people in our paper “The Myth of Mass Incarceration” by pointing out that most criminals, especially violent criminals, never get caught, much less spend any time in jail or prison.
Over the years, we hosted numerous events, including an event featuring U.S. attorneys who served in cities with rogue prosecutors; an event in Los Angeles featuring women whose children were slain and how Los Angeles D.A. Gascon’s policies helped the criminals and not them; an event at the University of California at Berkeley Law School with former San Francisco District Attorney Chesa Boudin, where we debated and exposed radicals who advocated for abolishing all prisons and defunding the police; and created a video series in San Francisco and Oakland, California, called “Societal Rot,” where we showed the consequences of rampant drug use and the soft-on-crime policies of Boudin—who was voted out of office because of it—and Oakland District Attorney Pamela Price.
We produced a mini-movie called “An Avoidable Tragedy,” featuring the murder of Wicomico County Deputy Sheriff Glenn Hilliard by a career criminal who then-Baltimore City State’s Attorney Marilyn Mosby refused to hold accountable for his repeated parole violations after his armed robbery conviction.
The new documentary stitches together the full story of the rogue prosecutor movement and features crime policy experts Heather MacDonald and Rafael Mangual, elected district attorneys, and victims of crime.
There are approximately 2,300 elected district attorneys across this great country. Who your district attorney is directly affects public safety, which is the bedrock of a civil society.
We hope this documentary opens the public’s eyes to what’s at stake and the real-life consequences of the rogue prosecutor movement.
https://www.dailysignal.com/2024/10/21/documentary-exposes-real-life-consequences-rogue-prosecutors/
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