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Finch: Hysteria over Trump and Tariffs

Donald Trump signs tariffs on steel and aluminum imports next to industry workers at the White House on March 8, 2018
AFP

The hysteria over tariffs with conservatives and Republicans is almost amusing. Do we not understand Trump? He always starts out with a big blast, a wide-reaching plan and predictably, everyone overreacts with endless cries of the coming apocalypse. He then pulls back, zeroes in on his targets and negotiates.

By starting at one extreme, it gives him more room to pull back from. Just like the Wall. We will never have a huge, continuous wall across the entire Southern border, but you start there and negotiate to a finish point. Same with tariffs.

First, some historical background. The idea that tariffs caused the Great Depression is way overblown, the depression had already started. The Smoot-Hawley tariffs, unlike Trump’s steel tariff, were draconian and certainly didn’t help.  Smoot-Hawley increased 900 import tariffs by an average of 40 to 48 percent. But there were so many other factors that caused a worldwide depression, which had started in Europe years before our tariff bill.

More than anything, the U.S. Federal Reserves’ monetary policy, and the creating of easy money helped create an artificial boom in the 1920s. Europe was already reeling in its attempts to recover from WWI. And when the market crashed in 1929, President Hoover’s interventionist policies only extended the depression – not to mention Roosevelt’s massive enlargement of government and the New Deal, which prolonged the depression even more. It was far from just tariffs.

We also need to remember, tariffs were the policy of the Federal Government from the early 19th Century until WWII. The Republican Party, born out of the ashes of the old Whig Party, was founded, not just as an anti-slavery party, but also as a pro-tariff Party. Tariffs were the standard policy of the Republican Party from Lincoln to Coolidge. Yes, tariffs are a tax but, it can be argued, a much better tax than taxing income. First, tariffs are a flat, consumption tax on imported goods. They cannot be used to extract more wealth from one taxpayer than another. Also, tariffs are collected from commercial importers, not private citizens. With tariffs, there is no direct contact between a citizen and a tax collector

And enough about this small, targeted tariff causing a trade war. The good folks in Peoria, Youngstown, Flint and so many more cities in the Heartland will argue that we have been in a trade war for decades – one we are losing. And yes, making steel is important and, yes, it is in our national security interests to keep making steel. Trump is correct: if you don’t have steel, you don’t have a country. Can one imagine us winning WWII if we didn’t have a steel industry?

Further, selected and targeted tariffs are good policy. For instance, the United States imposes a zero percent tariff on motorcycles imported from India while India has a 100 percent tariff on American motorcycles. Why would we allow this? Trump is seeking to mirror the tariffs imposed on goods from nations that have large tariffs against us. He can work out better deals with allies and nations that work with us; in fact, Trump has already relaxed the tariff against Mexico and Canada. After all this time, do people not see that Trump is always working for a deal?

“Free” Trade is not free; moreover, it needs to be fair. Free trade has hollowed out the middle of the country and almost destroyed our manufacturing base. It has destroyed families and livelihoods. Maybe that is just too hard to see from Newport Beach, San Francisco, or Manhattan.

Finally, for those partisans, Trump is building a coalition, a new Republican Party. And if he succeeds in pulling the working class into the GOP, the Dems are toast. And no, it won’t just be white men; it will be the black and Hispanic working class as well. It wasn’t the elites from the two coasts, the economists from Wall Street, or the Silicon Valley oligarchs that got Trump elected. Rather, it was the machinists in Wisconsin and the welders in Pennsylvania. Trump has been great for Wall Street as well and the corporate tax cut was huge for corporate America and businesses. But, never forget, he will keep his promise to Main Street and will keep his promise to fight for the American worker. America First!

Michael Finch is the president of the David Horowitz Freedom Center. His first book of poetry is Finding Home.

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