Tag Archives: President Trump’s tariffs

Policies Have Consequences

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On Thursday, The Epoch Times posted an article about America’s trade deficit in September.

The article reports:

President Donald Trump’s tariffs helped shrink the U.S. trade deficit to its lowest monthly level in more than five years, according to new data released by the Bureau of Economic Analysis on Dec. 11.

The U.S. goods and services trade deficit narrowed by 10.9 percent in September to $52.8 billion—the lowest monthly deficit since June 2020—down from $59.3 billion registered in August.

Economists polled by Reuters had forecast a September trade deficit of $63.3 billion.

The article notes:

Trump’s tariffs helped narrow the trade gap with other major U.S. trading partners, including China and India.

The goods deficit with China tumbled by $4 billion to $11.4 billion in September. Exports climbed by 0.2 percent to $8.8 billion, while imports fell by $3.9 billion to $20.1 billion.

The United States’ merchandise deficit with India also narrowed by about $1.8 billion to $3.05 billion.

U.S. and Indian delegations have been engaged in negotiations to iron out a bilateral trade agreement.

The article concludes:

Updated projections from the Congressional Budget Office suggest that enacted tariffs this year will generate $2.5 trillion of revenue, excluding dynamic effects. This is down from the August estimate of $3.3 trillion.

There is still uncertainty, Congressional Budget Office Director Phillip Swagel said.

“The United States has not implemented increases in tariffs of this size in many decades, so there is little empirical evidence to guide our estimates of their long-term effects,” Swagel said in a Nov. 20 report. “Consumers and businesses could be more or less responsive to increases in tariffs of this size, which would cause trade and revenues to diverge from projected amounts.”

The overall average effective tariff rate is 16.8 percent, the highest rate since 1935, according to The Budget Lab at Yale.

When America began, the government was funded by tariffs. At that point the government was following the U.S. Constitution and had not yet become the bloated mess that it is today. The federal government was limited to doing the things the U.S. Constitution allowed it to do. That is not the case today. We can’t just slash and burn the bureaucracy without serious consequences, but we can institute the cuts that the Department of Government Efficiency (DOGE) identified. The tariffs can help with the deficit, and cutting spending could help with the deficit. We need to unelect the people who are fighting the tariffs and the spending cuts.

The Impact Of The Tariffs

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On Sunday, Fox Business posted an article about the growth of manufacturing in America.

The article reports:

While some headlines fret over a weak jobs report, Marlin Steel CEO Drew Greenblatt sees something else entirely — a once-in-a-generation boom in American manufacturing that the media is missing.

“This is a re-industrialization of America. This is a fabulous, optimistic time,” Greenblatt told Fox & Friends Weekend on Sunday.

“[And] the mainstream media is missing what’s happening. It’s such an optimistic, good time for a factory worker, and these are good jobs… we need more of these jobs in our country,” he continued, tying the outcomes to President Donald Trump’s tariff structure, which he sees as reversing the long-standing trend of foreign dumping and offshoring.

Greenblatt expects overseas companies to start building inside the U.S. — a shift already underway, he argued.

“We’re having a new opportunity for factories in Germany, factory owners in Japan and England, they’re saying, ‘You know what? We’ve got to rethink this. We have high taxes where we are. We have very expensive energy where we are. And now, when we ship to our biggest client in the world, America, there’s this new 15% tariff, so this is crazy. 

“We’re not going to build in Europe anymore. We’re not going to build it in Japan anymore. We’re going to put that factory in America,’ and, when they do that, they’re going to hire local American workers,” he said. 

So why would companies that have manufacturing facilities in other countries relocate to America? Some of the things a manufacturing company looks for in a location are low taxes, cheap energy, reliable energy, and a relatively skilled workforce. A company is willing to pay a reasonable wage if the tax policies remain friendly and the energy remains cheap and reliable. As the tariffs go into effect, I believe we will see a boom in American manufacturing.

The Tariffs

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The featured article in the May issue of Hillsdale College’s Imprimis Magazine is  “Tariffs in American History” by John Steele Gordon, author, An Empire of Wealth: The Epic History of American Economic Power.

Here are some excerpts from the article:

Tariffs are among the oldest of taxes for the simple reason that they are easy to collect. Just send in the tax collectors and don’t let the goods being transported move until the duty has been paid. Being one of the earliest forms of taxation, it is not surprising that tariffs produced one of the earliest forms of tax evasion: smuggling.

In America’s colonial period, the east coast of the United States, with its many rivers and inlets that the small ships of those days could utilize, lent itself to smuggling, and the American colonists evaded British tariffs on a grand scale.

Indeed, Rhode Island, with its long coastline relative to the area and its many small harbors, was the epicenter of colonial smuggling, and it opposed any attempts to suppress it. Rhode Island was the first colony to foreswear allegiance to Great Britain, on May 4, 1776, two months before the Declaration of Independence. It was also the only state not to send delegates to the Constitutional Convention in Philadelphia in 1787, fearing that a stronger federal government, empowered to tax, would suppress smuggling. And it was the last state to ratify the Constitution, on May 29, 1790, more than a year after the federal government had come into existence. It did so then only under the threat of having its exports taxed as if from a foreign nation.

When the Constitution took effect in 1789, the first order of business was to straighten out the nation’s disastrous financial situation. That is why the new State Department started out with only five employees while the Treasury Department had 40.

When Alexander Hamilton became the nation’s first Secretary of the Treasury, he immediately began to prepare a schedule of tariffs, along with excise taxes on such commodities as alcohol and tobacco. The Constitution forbids taxing the exports of any state, and so American tariffs have always been laid only on imports.

The article concludes:

One of the provisions agreed to by the U.S. in the early GATT negotiations following World War II was differential tariffs: the U.S. lowered its tariffs more than its trading partners did. Again, the purpose of this was to speed the economic rebuilding of allies and former enemies who had suffered devastation during the war. But World War II has now been over for 80 years. The economic recovery of Western Europe and the Far East has long since been accomplished. Yet the differential tariffs in many cases are still in existence.

The U.S., for instance, has a 2.5 percent tariff on cars imported from Germany, while Germany has a ten percent tariff on American cars. In addition, Germany’s value-added tax is remitted on exports but charged on imports. As a result, while the logos of Mercedes-Benz, BMW, and Volkswagen are seen all over American roads, those of Ford and General Motors are a rare sight in Germany. And China, as already noted, is far worse, a world outlier, in terms of its nefarious trade policies.

President Trump wants to level this playing field. To do so, he has started what some are calling a trade war and others are calling the greatest example of “the art of the deal” in history. We will have to wait and see how it plays out.

The question we might want to ask ourselves is, “Is the media giving tariffs a bad rap because President Trump is putting them in place or because they are actually bad?”

The Broad Impact President Trump’s Tariffs Will Have

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President Trump’s tariffs are about leveling the playing field with the goal of bringing manufacturing back to America. If corporate taxes are low, energy inexpensive and reliable, and the workforce available, that is quite likely to happen. However, there are a lot of other benefits that could come from the tariffs.

On Saturday, The National Pulse reported on some of the possible far-reaching consequences of the tariffs:

The policy pushes toward restoring U.S. industry—steel, autos, manufacturing, and tech—by penalizing foreign-made goods and reducing reliance on market speculation and financial arbitrage.

Significance: If successful, this policy will:

    • Reshore U.S. production jobs;

    • Encourage foreign direct investment into real industry;

    • Lower long-term interest rates to reduce debt costs;

    • Shift the economy from financial engineering back to tangible production;

    • Realign the value of the U.S. dollar to support exports.

? Buried Lede: Trump’s true economic revolution isn’t just tariffs—it’s a bid to de-financialize the U.S. economy, cut Wall Street’s grip, and refocus on real industrial growth. The bond market, not the trade deficit, may be the real target.

…One of the more important secondary policy goals that the Trump White House likely hopes to achieve is a reduction in the 10-year Treasury Bond yield. While most people focus on the Federal Reserve Bank and its interest rate policy, the yield of long-term government bonds impacts interest rates on types of debt held for longer durations, including mortgages, credit cards, and, most importantly, government debt.

The tariffs are anticipated to push the 10-Year Treasury Bond yield lower, meaning the cost of the federal government’s payments servicing the national debt will be reduced. Notably, the inflationary cycle that set in under the Biden government—and was exacerbated by former President Joe Biden’s reckless spending policies—caused the cost to service the debt to increase dramatically and made it difficult for the government to take on any new debt.

The article concludes:

Conversely, after the tariff effects have subsided in the long term, the Trump White House economic team is likely to pursue policies aimed at weakening the dollar’s value to reduce America’s trade deficit. According to a theory proposed by President Trump’s chief economic advisor, Stephen Miran, weakening the dollar will discourage foreign governments through their central banks from moving assets into the United States. Miran argues this would reduce haven demand, where foreign governments move assets into stable economies to avoid domestic volatility. He contends this causes the dollar to be overvalued and subsequently increases America’s trade deficit.

President Trump ran on a platform pledging to transform the United States economy and put American workers first. The tariffs announced on April 2 are a significant step in fulfilling that promise, though the road to achieving an America-First economy still has many obstacles ahead.

Please follow the link to read the entire article. There is a lot more to putting tariffs in place than is generally being reported.