How much cost is one willing to endure just to prove a point? Obviously, the answer is much higher when someone else is paying for it.
U.S. taxpayers are paying the cost for President Trump’s illogical trade and tariff wars, and we will be paying for decades to come.
Our agriculture industry, which has a heavy presence in the Rio Grande Valley, is taking a hit as a result of the president’s tariffs and the retaliatory fees other countries have imposed on our goods. Trump responded Thursday by announcing $16 billion in aid to farmers who have been hurt by his policies, rather than simply correct those policies. This is in addition to $12 billion the president allocated last year after the agriculture tariffs were first announced.
And as a result the stock market, a good barometer of government economic policy, tanked.
This is a repeat of the similar case in which the president imposed hefty duties on imported metals, then fed U.S. automakers billions to avoid massive worker layoffs.
It should be easy to see that the president’s wish to see foreign markets buy more U.S. goods than we buy from them hits the American people twice: once through higher prices and fewer product options, and again when their taxes are used to bail out those who can’t sell their goods because of the tariffs.
Simply put, we wouldn’t need to bail out farmers and automakers if we didn’t impose those tariffs.
Trade deficits are a political rather than economic concern. Economists generally agree that it doesn’t matter whether more goods go one way or the other, since the exchange is equal — the goods go one way, money goes the other.
Moreover, tariffs aren’t the answer. After Trump imposed $250 billion on Chinese imports, our trade deficit with that country soared to $323 billion, a record high. The tariffs raised the prices of Chinese goods, and thus their value. Yes, China’s retaliatory tariffs raised the value of U.S. goods also, but because U.S. consumers generally are more affluent than those in China — or most other countries, for that matter — those duties are more likely to change buyer behavior in those countries than in ours. Americans might grumble about higher prices, but we are more likely to endure them. Foreign consumers will decide more quickly that they can’t afford American goods and buy domestic alternatives. Thus, the result only compounds the trade deficit that bothers our president.
Alarmists’ assertions that China “owns” increasing amounts of our national debt are true. However, they have less to do with trade deficits than our government’s penchant for deficit spending. Like most other governments, including ours, China raises revenue by buying interest-bearing notes issued by other countries, including ours. As long as we’re selling bonds to finance government endeavors, China is buying.
If Trump really wants to help American farmers, car makers or any other industry, he should pursue policies that lower prices, not raise them, so that foreign consumers can afford them. And he should stop worrying about who’s buying or selling more than anybody else; U.S. farmers, manufacturers and traders surely would rather prosper in an open market than go broke by winning a war of attrition.