OPINION: Don’t cry foul, or ‘chicken,’ on Trump’s tariffs
He Says
The first presidential election I was eligible to vote in was in 1980. I proudly voted for Ronald Reagan. I cut my teeth on his free trade agenda, and I still believe in free trade. Free trade allows the individual to specialize and trade that good or service to anyone in the world for a fair market price.
Free trade is a natural part of individual freedom. It is a basic freedom, and while not called out specifically in the Constitution, it is acknowledged in the Interstate Commerce Clause. Free trade is our natural right, just as free speech is.
There are specific instances where tariffs are beneficial for a nation. Tariffs that ensure a country can provide for itself during war. Tariffs are also needed when one country is dumping goods and services into another country. Dumping involves providing a subsidy to a particular industry, thereby enabling it to sell its products for less than cost.
After World War II, the United States. applied high tariffs on imported sugar. This was done to ensure that sugar production in the U.S. could continue since the cost of production in the U.S. is very high compared to other countries. That’s an example of how specific tariffs are needed to protect a nation’s self-interest.
The chicken tax has preserved the automotive industry in America. If you examine the U.S. automotive industry, you will find there are few American built sedans. The ones that are built are made by manufacturers from overseas producing in the U.S. This is due to the chicken tax. To understand the chicken tax, you have to go to post-World War II Europe.
After the war, Europe was devastated not only in manufacturing but also agriculture. As part of the Marshall plan, the U.S. exported many agricultural goods to Europe. By the end of the 1950s, European poultry had regained its footing and added a tariff to incoming poultry to protect its poultry production.
In response to this tariff, President Lyndon B. Johnson imposed a 25% tariff on imported light trucks. This was primarily aimed at Germany’s production of pickup trucks but was applied to all imported pickups. President Reagan did not repeal this nor the sugar tariffs, as well as several others. These tariffs are still in place to protect domestic production.
In the early 2000s, after the breakup of the Soviet Union, Russia had little beef production. In the USSR, production of beef was primarily in the Ukraine. After the breakup, Russia decided it needed to ramp up its beef production and imposed a tariff on imported beef. It now supplies most of its own domestic beef.
President Trump, in his first term, targeted European “luxury” cars with a specific tariff. He also targeted China on specific and general products. Again, these are targeted at specific goods or to combat dumping. Now the president has started using tariffs as a negotiating tool.
The reciprocal tariffs are being used as a tool to get a better trade deal with other countries. The problem with this is you must continue the tariffs on countries that don’t faithfully negotiate with you. If you are bluffing, the whole thing will collapse.
This is where we are now. Many of our (America’s) friends and allies are calling foul on this tactic; however, that may just be part of the negotiation to get the best deal they can.
You will see exaggerated claims on both sides of this trade negotiation; however, both sides are citing the most extreme examples of the negatives and positives of this shakeup. The stock markets are volatile, and that is normal whenever there is something new in the global economic condition. Do not judge the wisdom of these actions by the volatility of the stock markets. There are profit takers and bargain hunters that affect this volatility.
How does this affect the local economy?
The president’s goal is to bring manufacturing back to the U.S. Those opposed say it will bring inflation. I believe they are both right. By manufacturing in the U.S., goods will cost more, the tariffs will make imported goods cost more. That will lead to higher prices for manufactured goods, the same way sugar costs more in the U.S. than it does in other countries.
On the other hand, more manufacturing jobs will bring higher wages that should more than offset the rising prices. The middle class will grow, the poor will shrink; however, the gap between the middle and the poor will be larger.
This is where our Christian faith must step in. We must build a safety net. Each community must do its part in helping those in need. We have all seen how poorly the federal government performs in assisting the poor. Each city, county and state must provide for the poor. The primary driver for this is the local community.
