By mistaking the real nature of international trade, the costs of tariffs, the effects of currency movements, and the supposed ease with which the United States could quickly re-establish itself as a low-cost manufacturer, Trump risks shredding the safety nets that have undergirded the U.S. economy for decades and plunging us into a war we are ill-equipped to fight.
Tariffs are paid directly from American businesses to the government’s coffers.
Protectionism fully implemented across all industries would mean a lower standard of living, because it would result in capital and labor unnecessarily being diverted into the production of goods that could more economically be produced elsewhere.
We should not only allow global capitalism; we should welcome it and foster it in every way possible. It is time to rephrase Karl Marx: Workers of the world unite for global capitalism; you have nothing to lose but your poverty.
At the end of the day, the balance of payments always balances.
The president pledges to “make America great again,” which is a crucial and noble sentiment. But protectionism only hurts rather than helps do that job.
The fact is, while the U.S. and the major European countries have emphasized the idea and benefits from free trade, all of these governments impose various types of tariff and other barriers to shelter selected sectors of their respective economies.
A trade war may also finally prompt China to do the smart thing and dump its trillion-plus holdings of U.S.
Elimination of the trade deficit will be a hollow victory if it results in a significant reduction in living standards.