The left is gleefully predicting that Trump’s proposed tariffs against nations that don’t play fair will exacerbate the high costs of goods and services caused by rampant inflation under the Biden administration. Superficially, it’s an easy argument to make — if you increase the cost of goods coming from other countries through tariffs, American consumers will have to pay more. So, the myth is gaining traction. But the truth is practically the opposite.
Joe Biden’s own Treasury Secretary Janet Yellen confirmed last year that tariffs do not raise prices on goods and services, “I don’t believe that American consumers will see any meaningful increase in the prices that they face.”
Democrats and their comrades in the MSM conveniently leave out that Biden extended Trump’s China tariffs. Former White House Press Secretary Karine Jean-Pierre said they were “all about protecting American workers, protecting American businesses.” The China tariffs ultimately decreased Chinese exports to the U.S. by 25% and reduced the deficit with China by 35%.
The Democrats’ superficial criticism ignores Econ 101 and the reasons for tariffs in the first place. Trump wants to implement them in order to coerce other countries to level the playing field with the U.S., which will contribute to bringing prices down everywhere as countries are forced to change their unfair trade practices in order to get the tariffs removed.
Tariffs are also enacted to reduce trade deficits with these countries, which refers to the situation where the value of goods and services being imported into a country exceeds the value of what the country exports. Trade deficits decrease jobs and encourage foreign investors to buy up our assets. The U.S. has been running a trade deficit since 1976.
And a primary reason for tariffs is to encourage Americans to buy American. China can undercut our prices, but it’s at the expense of treating their workers poorly in sweatshops. Where is the outrage from American unions? Chinese factory workers have tucked notes into the items they manufacture like purses sold in Walmart, which say things like “We are ill-treated and work like slaves,” “[We are treated worse than] horse cow goat pig dog (sic) and “We suffer torturement, beat and rude remark (sic). Nearly no payment.”
China hasn’t been creating a fair playing field. While it sounds good in theory to have “free trade,” you can’t have free trade internationally when one side isn’t playing by the same rules, treating their workers substandardly and stealing our intellectual property to create artificial advantages. Theft of IP by China costs the U.S. economy an estimated $225 billion to $600 billion annually, according to a 2017 government study.
Just the mere threat of tariffs is already working. Canada’s ambassador to the U.S., Kirsten Hillman, told the Associated Press the country is prepared to buy more American products in order to “appease Trump’s tariff threat.” American aluminum manufacturer Alcoa said the company will likely send its Australian output to the U.S. if the U.S. imposes tariffs on Canadian imports.
Democrats launch into hysterics when discussing placing tariffs on Canada, but fail to acknowledge that the average annual trade deficit with our neighbor to the north increased 228.9% under the Biden administration, more than triple what it was under Trump’s first administration.
The CEO of South Korea’s Hyundai said investing in the U.S. is the best antidote to tariffs, and Hyundai Steel is considering building a plant here. Also in response to the tariffs, German Audi and Porsche are considering building manufacturing plants in the U.S. South Korea’s Samsung is now contemplating relocating its dryer production from Mexico to its manufacturing facility in Newberry County, South Carolina. And similarly, South Korea’s LG Electronics may move its Mexican refrigerator operations to its washing machine and dryer plant in Tennessee.
The $3 billion American shoe company Steve Madden is cutting its production in China by half due to the threat of tariffs.
Trump’s previous tariffs have a proven success record. His tariffs on steel and China “reduced imports of affected steel products by 24 percent…and increased U.S. production of steel products by 1.9 percent,” a report from Congress found. The 2018 tariffs slapped on China, which ranged from 7.5% to 25% on over $360 billion of imports, decreased the trade deficit from nearly $420 billion to just over $270 billion, according to official government data.
Under Trump, the trade deficit with Mexico averaged $89.3 billion, whereas under Biden, it increased by 52% to an average of $135.7 billion. Cheap imports of steel and aluminum are crushing those U.S. industries — and much of the steel is actually made in China. U.S Steel responded by pursuing a sale to a foreign-owned multinational. Zekelman Industries, North America’s largest independent steel pipe and tube manufacturer, closed its Long Beach, California, plant and laid off 150 workers due to Mexico’s steel dumping.
The Trump administration points out that the U.S. shoulders the burden for Canada’s defense, since they have no real defense forces. The US covers about 60% of the bill for NORAD defense, and our Air Force protects Canada. As a result of the savings, Canada spends 62% less per year than the U.S. on defense as a percentage of GDP; 3.4% of GDP in the U.S. compared to 1.3 percent in Canada. Where’s the gratitude, why can’t they reciprocate with real free trade?
No one really believes Trump is going to make the high cost of goods even worse. The reason the left gets so much traction with many of its crazy positions on issues is because they’re able to take a superficial view on them with short catchy sound bites that sell easily to the American public. Until the right can figure out a way around this, they’ll continue to hold sway over Americans with outrageous views.
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