Trump’s Tariffs In An Era of Economic Decline
Junious Ricardo Stanton
“A tariff is a tax on imports, often known as a duty or a trade barrier. The purpose of a tariff is to protect domestic production and jobs, though economists say other domestic sectors and customers ultimately pay for tariffs.” What Is A Tariff, Who Pays and What Is the Purpose of A Tariff? Jed Graham https://www.investors.com/news/economy/what-is-a-tariff/
Donald Trump campaigned on the slogan “Make America Great Again” and promised as the world’s greatest deal maker, he would renegotiate existing trade agreements, do away with NAFTA and get better deals with trading partners like China and the European Union. Some people liked Trump’s feel good message and fell for his okey-doke not realizing Trump has not telling the whole truth even though his America First message sounded good.
Once he was elected Trump embarked on his plan to Make America Great Again by threatening, lambasting and denigrating other countries’ leaders and his predecessor’s policies, deals and agreements. But most people forget the policies of Bu$h, Clinton, Bu$h and Obama were a direct response to the ruling elites’ agenda of globalization.
Corporations and companies made the decision to shutter American factories deindustrialize America and ship those jobs and the investment capital needed to sustain them overseas! The US also failed to embrace technological innovation. For example, US steel makers refused to employ new recycling processes which were much more efficient so the older plants closed. https://microeconomicinsights.org/productivity-impact-new-technology-evidence-us-steel-industry/
America went from an industrial economy to a service economy because Wall Street decided to make that change and fatten their profits using cheap overseas labor. The truth is, China did not steal American jobs. CEO’s, financiers and politicians conspired to reinvest their money, to build factories, plants and call centers in places like India, Mexico, China, Malaysia and Viet Nam rather than pay American workers decent wages and provide benefits that would boost their standard of living and the American economy.
Businessman and former US presidential candidate Ross Perot recently made transition. When he ran as an independent candidate for president in 1992 he warned the American people about the devastating impact the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariff and Trade (GATT) which was replaced by the World Trade Organization in 1995 would have on the US economy. The corporate media downplayed Perot’s insight and the duopoly political parties pushed the global agenda of their corporate patrons.
These high level decisions are the reason we are in the mess we are today. Globalization, economic imperialism, the off shoring of capital and operations (plants, factories, and transportation logistics) has been the downfall of the American economy. The deliberate redirection of capital (investment) and factories overseas has resulted in massive deindustrialization, the loss of millions of jobs and employment opportunities for Americans. Disruptive technologies are also major factors. Read https://microeconomicinsights.org/productivity-impact-new-technology-evidence-us-steel-industry/ and https://larouchepub.com/other/2009/3645globztion_destroy_labor.html to glean additional perspectives on this issue.
Trump ran on restoring American economic viability and stature; but his policies belie his grasp of macroeconomic principles. Trump chose to pick fights with US trading partners, Mexico, Canada, the EU and China. He has threatened or imposed tariffs on steel, aluminum and other products from these countries. His negotiations with China are currently at a standstill and the deal he negotiated with Mexico and Canada (USMCA) to replace NAFTA is not that radical. The US can sell more milk to Canada and the percentage of cars manufactured in North America (US, Mexico and Canada) has increased and workers making those cars must make an average of $16 an hour and the USMCA discourages currency devaluation but that’s it.
The reality is globalization has gutted US factories and industries and tariffs are not a short term solution because there is no US industry to protect. There has been no massive repatriation of investment back to the US like Trump promised. His tariffs and trade wars will further shrink US capabilities because the reinvestment and capitalization Trump promised is not happening on a large enough scale. Don’t confuse deregulation or inflated stock market prices with domestic economic stability; there are too many other factors at play such as overseas cheap labor, investment, the status of the US dollar, US interest rates, resources, raw materials, international politics and relationships.
To make matters worse debt burdened US consumers are the ones who will pay the costs of Trump’s tariffs not the exporting nations! These rising consumer costs plus worker’s decades’ long stagnant wages are putting a hurting on Joe and Jane Sixpack.
- add insult to injury, Trump’s trade war with China has cost US farmers billions in losses. Trump’s tariffs have not produced the desired results and his ever escalating sanctions on more and more countries are making it difficult for other nations to view the US as anything but an arrogant schoolyard punk. As America’s strongest rivals like China stand up to the US, it will become more evident the US is a paper tiger.
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