President Donald Trump tweeted on March 2, 2018: “. . . trade wars are good, and easy to win.”
Since Mr. Trump made this ill-informed statement, he has initiated or threatened tariff wars with China, Mexico, Canada, Japan, the European Union and India.
Mr. Trump doesn’t understand tariffs. A tariff is a tax on goods coming into a country. Who pays the tariff on Chinese goods subject to Mr. Trump’s tariffs? It’s the U.S. consumers who want finished goods or U.S. companies that want materials in order to build their products. When U.S. manufacturers’ costs go up, U.S. consumers pay more.
When China retaliates by imposing tariffs on U.S. exports, like soybeans, what happens? China buys its soybeans from Brazil. U.S. soybean exports to China have dropped 80% since the trade war. Secretary of Agriculture Sonny Perdue recently admitted that American farmers are “one of the casualties” of tariff wars. Because farmers were important Trump supporters, Mr. Trump is giving soybean farmers a $28 billion bailout to compensate them for the harm his policies have caused.
To summarize: (1) Americans pay Mr. Trump’s tariffs, (2) prices for U.S. goods rise, (3) U.S. exporters lose sales, and (4) Mr. Trump bails out his supporters with our tax dollars.
In 1930, President Herbert Hoover signed the Smoot-Hawley Tariff Act, which greatly increased tariffs on foreign products. Experts believe that these tariffs worsened the severity and length of the Great Depression. Hoover, Sen. Reed Smoot and Rep. Willis C. Hawley were all thrown out of office in 1932.
Karl Kline
O’Hara
Note from KBJ: Donald Trump has forgotten more about trade than Karl Kline will ever know. Tariffs are a means to an end, not an end in themselves. Trump knows what he’s doing.
