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Tariffs Are Taxes — and a Political and Economic Killer
by

America was founded in 1776 with a clear mission to create the world’s first truly free society. Freedom of religion, interstate trade, and unalienable rights provided citizens the ability to thrive and blossom.

The great experiment produced unthinkable abundance and made America the greatest example of a unilateral free trade zone in world history. Fifty states in perfect harmony with no tariffs or restriction and the results are astounding. California ships produce during the winter; North Carolina sends out furniture and Texas and Louisiana supply gasoline for our vehicles. The USA with 300 million citizens produces 24 percent of the world’s GDP.

The EU common market (free trade zone) replicated the American’s interstate free trade concept within 28 European countries that formerly were at war but now are trading partners, achieving 21 percent of world GDP.

The economic principles of cooperation, opportunity cost, and unilateral free exchange produce abundance and help avoid conflicts. Business flows to producers based on comparative advantage and intense competition. Every citizen wins with lower prices, quality, and availability of virtually any product or service possible.

Average American and Western European families are rich by world standards and are the envy of the world. America is a melting pot of cultures because people from every other nation flock to our society of freedom and wealth. “The American Dream” has become synonymous with the opportunity to create one’s own limitless success.

Trade beyond the United States and the European Union is not unilaterally free. The North American Free Trade Agreement is not free because of 1,700 pages of explanations, restrictions, and stricture, but it’s an improvement over mercantilism.

When trade is compromised for one country, all countries are negatively affected. Conversely, limiting regulation and barriers to free trade ensures that all players have the ability to compete and win. Ultimately, this allows everyone to succeed, raising the quality of life for all involved.

The Northern Italians and Germans are experts in producing equipment for many industries. American companies using their equipment can produce at lower cost and create jobs.

Asian countries produce electronics such as smartphones at low cost helping companies like Apple and Google to be massive international companies, based right here in America.

Trade is not a zero-sum game because it makes every citizen richer. Products manufactured in the USA today contain components and manufacturing machinery from multiple continents.

Some government officials now talk about managed trade, which is government intervention. A few government officials managing a market of billions of people and transactions are a prescription for economic regression, not growth.

America has tried managed trade before and the consequences were horrific, namely Smoot-Hawley 1930, the tariffs on 20,000 items, which made the Great Depression far worse as foreign countries retaliated and the result was loss of GDP and jobs. In 1934 tariffs were reduced because of these jobs losses.

Tariffs are taxes on our citizens. They reduce economic growth and increase the price of goods for all citizens. The Bush steel tariffs of 2002 caused the loss of over 200,000 American jobs. This job loss was self-inflicted by tariffs (AKA taxes).

Managed trade and tariffs make all countries poorer and produce no winners. American steel and aluminum producers will be temporarily protected by tariffs, but in the longer term our steel industry will be less productive and weakened.

Threating tariffs may sound like a great negotiating tool but in reality, the market responds in real time. Trump’s steel tariffs have already resulted in price increases of all types of steel and products manufactured from steel.

Jobs will be lost, the consumer will suffer, and the party of Trump will pay the price in the midterm elections.

 

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