President Donald Trump has shown great leadership on many issues over the past few months in office. The president has promised the American people a government that lowers taxes and respects the right of businesses to operate without government interference. It appears that the voices of caution who are counseling for tariffs to be leverage for better trade deals are winning over the voices who want crippling long-term tariffs.
Like many, I feared that President Trump was listening to anti-trade voices like Peter Navarro, who have been publicly announcing that debilitating trade taxes on imported goods were “just the beginning.” There is a growing faction of the Republican Party who are economic isolationists and support massive tariffs that are intended to be permanent. In contrast, my former boss Sen. Rand Paul (R-KY) points out that “tariffs are taxes” and cited estimates that put the cost of tariffs on families between $1,200 and $4,200 a year. For most of the past month, it seemed that the angry voices of protectionism were winning.
The anti-trade voices want permanence. They push the idea of perpetual tariffs as a means to insource manufacturing. They ignore that our nation will be hurt by nations responding with tariffs of their own. The idea of a ‘trade war’ implies economic casualties on both sides, destruction and a long-term fight for victory. The problem is that victory is not defined as leveraging better trade deals for the voices of economic isolationism – they want to quarantine our economy from the world. That is completely unrealistic and will destroy our economy.
Even the implementation of temporary tariffs has a cost to Americans. They have inflicted economic pain on small businesses that rely on imports. American manufacturers who use imported goods to make products were injured. The biggest losers were consumers who want access to imported affordable groceries, computer products and other goods without paying a value added tax.
Think about the results of the tariff announcement heard around the world. In the immediate aftermath of the announcement of new tariffs in early April, benchmark stocks took a hit of $5.2 trillion in value. While our so-called “trade deficit” for manufacturing is $1.2 trillion in goods, our trade surplus in services is $295 billion. A trade war will encourage trade partners to target American services with tariffs. Importers paid tariff tax bills, and small businesses that rely on foreign imports hang on for dear life. Americans may be ok with some short-term disruption. Still, a long war on trade with Canada, China, Mexico, the EU, and the rest of the world would be mutual assured destruction of our economy and our trade enemies (and allies for that matter).
This pain is more tolerable if tariffs are short-term and result in the lowering of trade barriers abroad.
The voices on the progressive right are loud and undeterred by the short-term evidence that tariffs impose a heavy cost on the very people, middle- and low-income Americans, they claim to want to help. Voices like Oren Cass of American Compass who told The New York Times “there’s plenty of room to correct course and say something like, the 10% global tariff is permanent and immediate, and we are asking Congress to pass a bill” with the ultimate goal of getting “Congress on board and make (tariffs) permanent.” Permanent tariffs will transform the economy in a way that will hammer American families when they try to purchase anything that is imported. Forget about a new car made with imported components or an iPhone (manufactured in China). These well-educated trade haters want to use government power to transform the economy into one that more resembles a European one. They don’t believe in free markets and prefer government-managed commerce.
Now is the moment for President Trump to reassert American leadership. He has established strength in trade negotiations that give him unprecedented levels of leverage. The existing tariffs and the threat of future ones have brought foreign leaders to the table to negotiate something the trade haters despise – new free trade deals.
AMERICA’S CRUSHING DEBT IS A THREAT TO FREEDOM
President Trump should drag foreign leaders, kicking and screaming, to the negotiating table and cut new deals. The threat of new tariffs if they don’t comply should be enough to put them on notice that the president is serious.
President Trump can now declare victory in the trade war and announce a tariff cease fire.
Brian Darling is former Counsel for Sen. Rand Paul (R-KY).