Sen. Rand Paul (R-KY) claimed that a key problem with the tariffs recently implemented by the Trump administration is based on a “fallacy” that the U.S. does not benefit from trade with other nations.
The Kentucky senator said that Trump’s argument for tariffs is “fundamentally backwards” because it is based on the idea that when countries engage in free trade, “someone must lose” and that foreign countries like China or Japan are benefiting from trade more than the U.S.
“It’s absolutely a fallacy,” Paul argued on CNBC’s SquawkBox. “Every trade that occurs in the marketplace is mutually beneficial. If you have a free society and I trade with you, if you want to sell me your coat and I give you $200 for it, we both agree to it, and we’re both happy with the trade. No American consumer trades with China. They trade with Walmart, or they may buy something from China, but they individually buy something they want, and they make a decision. The trade is always a win-win.”
Paul also spoke out against “artificial accounting,” seeking to showcase trade deficits between the U.S. and other nations. He compared it to a Corvette employee who had his labor purchased by Chevrolet but did not purchase a Corvette or any other cars made by the company. Paul said the U.S. needs to ask whether trade is beneficial, warning that if Trump’s tariffs push the country into a recession, the U.S.’s trade deficit would go down “because we’re all buying less stuff.”
Paul also criticized the level of dishonesty of the Trump administration about tariffs for dairy goods exported to Canada. He said there is a “big difference” between the claim that there is a 270% tariff on these exports when “the truth” is that this tariff only counted on goods that exceed the amount allowed into Canada. The senator added that Trump should be “congratulated” for negotiating this cap on dairy exports to be raised but that the administration also needs to have “an honest debate” about its tariffs.
Despite his criticisms, Paul underscored that he is an ally of the president, saying he still has “a good relationship” with the president even though Trump will talk to him “in all caps” on why tariffs are beneficial. He contended that some actions in Washington, D.C. are “fundamentally partisan,” citing the previous impeachments against Trump and how he led the opposition against him.
“I supported Donald Trump, do support Donald Trump, but I don’t support the tariffs, and I don’t support debt, and so I have to fight these battles or who would I be, or why should I be here if I’m not willing to fight for what the people sent me here to do,” Paul explained.
TRUMP’S TARIFFS FAR HARSHER THAN OTHER METRICS THAT MEASURE FOREIGN TARIFF RATES
Ahead of the April 2 tariff announcement, Paul stressed that he would continue to advocate against tariffs, telling reporters that “almost every industry” in his state has warned him the tariffs would raise the prices of homes and cars. He has also dismissed any concern about how his opposition to Trump is covered, telling the Washington Examiner that “all I do is take my positions.”
In the wake of the administration’s tariffs, the stock market rebounded on Tuesday following several days of losses. It marked the first time stocks opened in the green since the tariffs were announced.