Some Thoughts on Tariffs

Tariffs have been in the news lately and have been on my mind for some time.

Donald Trump, of course, was talking a lot about tariffs on the campaign trail and as President he used the threat of tariffs (among other penalties) to get Venezuela to agree to the return of illegal aliens. He also used the threat of 25% tariffs on both Canada and Mexico to spur those countries into closing the borders with the United States and to punish anyone producing or trying to smuggle fentanyl into the US. Within hours of these tariff threats both countries agreed to 10,000 soldiers from each country to guard the borders on their side and new penalties for drug dealers. As many have remarked - it was the art of the deal.

While I greatly enjoyed Roger Lowenstein's thought experiment about tariffs between states - I think he misses the point. As the late great Gene Wilder once explained what made him a star was the fact that he wasn't acting - he was reacting. This allowed his natural innocence and humor to emerge for all to see. Likewise Trump isn't acting to make tariffs a cudgel but reacting when country's are not acting properly - that's when he uses tariffs.

In the case of Venezuela blustering that they wouldn't take back illegal immigrants and in the cases of Canada and Mexico - their acceptance of open borders and allowing the flow of a drug that is a known killer of US citizens. His aim was never to harm the US consumer. Note that both Canada's and Mexico's economies rely heavily on exports to America. US exports to those nations? Barely noticeable to the economy.

Canadian fuel was the exception and higher costs because of tariffs could have been felt by the US consumers at the pump. Which is why they were just a proposed 10% not the 25% that was levied on the rest of the goods.

It should be noted that in Trump's first term he negotiated free trade agreements with both Canada and Mexico. It was only when they devolved into bad neighbors did the threat of tariffs enter the equation.

China? They've been bad actors for a long time and I get the feeling that the 10% proposed tariff if not permanent will probably go up. But again - here Trump is once again reacting to Chinese actions over and over. Do we need further proof that the CCP is not to be trusted?

There are a number of other countries that may not be as egregious but fall into the category of their import tariffs on us are onerous and one sided. We should retaliate with tariffs on these nations as well. No matter how friendly they may appear to the naked eye. What’s fair is fair.

Coupled with the rising costs of Social Security, Medicare, and interest payments these tariffs appear even more urgent to anyone paying attention to our rising federal deficit. Reducing spending and lowering interest rates will only go so far. An External Revenue Service like the Trump Administration proposes makes so much necessary sense.

Tariffs were the way this country brought in revenue until 1913. That’s another historical truth that’s little discussed. What would critics have turn to - higher income taxes or a European style VAT?