The tax man cometh: It’s Trump and his love for tariffs
By now, most people should understand that President Donald Trump’s Twitter account has little real value.
He employs social media as a weapon of mass distraction to rally his most fervent supporters and provoke his most ardent detractors.
The exception to the rule is: “I am a Tariff man.”
What Trump fails to comprehend is that a tariff is a type of tax, in this case, one imposed on Americans. He reiterated his ignorance when he added:
“When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN.” Balderdash. Exporters in foreign countries do not pay tariffs, the importing country’s consumers pay them through higher prices. Trump’s tariffs on steel, aluminum and Chinese goods have added $4.4 billion to the “coffers of the U.S.A.,” as he put it in another tweet, but that’s our money, not foreigners.
Trump is more accurately “a Tax man.”
Supporters will argue that forcing Americans to pay a little more to protect U.S. businesses and jobs is noble and patriotic. They admire Trump’s gumption in violating international norms and rejecting high school-level economics.
Using government power to shield companies from competition, though, is socialism. Call it by its name.
The conservative Tax Foundation calculates that Trump’s tariffs have cost American consumers $42 billion. They also cut U.S. hiring by the equivalent of 94,300 full-time jobs. This is why I am not a Tariff man.
Trump’s staff argues that tariffs punish China for cheating because when goods cost more, consumers buy less. But there are better ways of wrangling a brutal, communist power than making Americans
pay more for plastic ware.
The administration’s mistake is believing that because the U.S. economy is the largest in the world, Trump can force other governments to compromise. But that doesn’t play in Beijing.
China is already the world’s largest trading nation, importing and exporting $4.23 trillion in goods a year, compared to America’s $3.84 trillion. China’s exports also exceed imports, which is why Chinese incomes are rising.
China’s economy is the world’s second-largest and gaining ground. With 1.38 billion people, compared to only 325 million Americans, China’s economy will undoubtedly exceed America’s by no later than 2029, based on current growth rates.
Past presidents understood they needed allies to force policy changes in such a big and recalcitrant nation. Whether it was President Bill Clinton enlisting World Trade Organization members, or Presidents George W. Bush and Barack Obama organizing the Trans-Pacific Partnership, they knew a united front could force Beijing to conform.
Some of those efforts succeeded better than others. But there is no doubt outside pressure shaped China’s decision to abandon Maoism and integrate capitalist competition into their communist system. In many ways, China owes its economic success to WTO rules.
But as China’s economy and global integration has grown, so has the Communist Party’s global aspirations. Xi has abandoned policies that limited his nation’s military strength and has developed a more muscular foreign policy that includes projecting military power overseas.
Xi’s nationalism and willingness to cheat the international trading system reflects China’s long-held resentment of Western imperialist powers plunging the nation into poverty for 200 years. Chinese fentanyl destroying middle America echoes Britain's Opium Wars that crippled China in the 19th century.
To gain prominence, Xi has positioned himself as the world’s foremost promoter of free trade, a position Trump abdicated. While Trump blasts multilateral trade agreements, Xi is signing them with as many countries as possible.
If our president wants to force China to change, he should be building a global coalition committed to zeroing out tariffs and signing historic trade agreements. The TransPacific Partnership with 11 allied nations and the TransAtlantic Trade and Investment Partnership with the European Union are excellent examples.
If the U.S. joined TPP and completed TTIP, those alliances would control more than 56 percent of the global economy. If Trump can put China on the outside of successful, profitable trade agreements, the world could require Beijing to change its policies in return for inclusion.
Levying import taxes that cost American consumers billions and cut tens of thousands of jobs is not the answer. The Tariff man needs to learn that carrots are far more effective than sticks, and a lot less dangerous.