I think there are times for everything, but having said that, there are also consequences. Today in a world economy, we can compete with other countries without losing our superiority in lifestyle. There is no doubt that the only people hurt by this are the American consumer. People like Herbert Ross are the Marie Antoinettes of today. Yeah maybe the tariff would only cost the consumer an additional $150 or so on cars, but with 17 million cars sold every year, that’s 2 1/2 billion dollars that the average American isn’t spending on other stuff. Maybe a $150 doesn’t mean much to Ross, but it can buy so much more for the average American. And, that’s just one sector affected by this tariff. Those that favored the tax cut realize that this tariff could eat up all the savings of that tax cut.
Trade deficits have so many unrelated aspects. It’s not just production that drives our economy. Would Apple have sold 1 billion Iphones if they had cost twice as much? What would have happen to those jobs? There are 150,000 jobs related to steel production. There are 6 million jobs in the sectors surrounding steel that might be in jeopardy. What happens when Canada or the EU put tariffs on blue jeans, almonds, wine, soy beans and motorcycles? How many jobs are lost? And what happens when the Japanese car industry decide to raise prices as a counter? 77% of their cars are built here. How many Americans will lose their jobs? It’s a lose/lose idea for America.
Keep in mind when you talk about trade deficits, there are hidden factors. First, population: There are more Americans than Canadians (almost 10 times more). Of course we will buy more from them then they buy from us. Second, economics: This is three fold. First, we are no longer a production economy, we are a consumer and intellectual property economy, and… Countries like China are not a free market economy. they can adjust the price of sale to corner the market. Why wouldn’t they do it again to compensate for the tariff. Their people get the same whether they sell one or a hundred products. Third, we have a more robust income. We can simply buy more. Take the average American and the average Mexican. Who do you think buys more?
The problem with Trump, is that he hasn’t learned that you are more successful with the carrot and the stick. His technique of muscle flexing will always work initially, but I’ve never known a bully that lasted long on the playground. Eventually, the other kids will team up and call his bluff. Then the bully is exposed for he really is. An emperor with no clothes.
After WWII we were the only option when it came to commodities. The rest of the world was war torn and we stood above it with the raw materials and products to fill the demands of the world. Today, they are produced around the world. So are products. The rest of the world can live quite comfortably without us. But, we need the rest of the world to continue to grow our economy. We’re no longer the only game in town. What the president is doing with his tariff plan is isolating the U.S. from the rest of the world and opening the door for countries like China to fill that void.
A Randumb Thawt…
If the President really cares about those who have been displaced by the combination of outsourcing, cheap goods from other nations, and robotics, then retrain them to become contributors in the 21st century. Teach them to install solar, teach them to work as caregivers, teach them to build a bridge, but thinking you can return to bygone days of the man pushing the giant vat of steel with a long stick, is nothing more than a boondoggle.
I’m reminded of the proverb: “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” All the President’s tariffs will do, is teach other countries how to fish. And they will do it cheaper and in some cases, better, than we can do it. Recently, the EU and Japan signed a free trade agreement that will rid them of 95% of the tariffs. This agreement was motivated by the need to fight back. President Trump’s trade war is not opening doors for American products, it’s pushing us out the global market, and the results just might be permanent.