President Donald Trump has attracted a lot of attention threatening increased tariffs on products produced in foreign countries.
Since tariffs mean higher prices at the checkout kiosk, many people would rather let the present trade imbalance slide and not max out their credit cards.
The foreign manufacturers are not pleased, either, and retaliate.
What we have seen in recent weeks are increased tariffs on US food exports. Since Middle American farmers are the heart of the Trump base, the target appears well chosen, if you are from China.
We raise tariffs. They raise tariffs. Pretty soon you have a full-time trade war.
What many of the people bemoaning this economic conflict refuse to recognize is we have been in a trade war for the past 30 years or more.
Following World War II, the US was not only the world’s only military super power, we were the only economic big boy. All the other major industrialized countries had been in the war zone. Their factories had been bombed. Their infrastructure destroyed.
Through efforts like the Marshal Plan, the US helped our former enemies and allies rebuild their industries. We also could afford to turn a blind-eye to their protectionist tariffs as they attempted to restart their economic engines.
While the US is still the world’s largest consumer, we no longer enjoy a dominating manufacturing position. And have not for some time.
In 2017, US imports exceeded exports by $795 billion.
Our top trading partners include the European Union which sells us $434 billion per year and imports just $283 billion.
The US has a trade deficit with China of $375 billion. Mexico and Japan account for about $70 billion of our trade deficit, each.
President Trump is attempting to explain to the country and the world this deficit is not solely due to our love of foreign cars and cheap clothing.
Our trading partners do not want to play on a level field.
In addition to the tariffs they place on our goods, they also subsidize many of the items they sell to us.
In what amounts to foreign aid, countries like China tax their people and use the money to lower the cost of products they sell to the US.
You are probably saying, “What’s wrong with that? If they want to sell their products to Americans below their cost, let’m.”
These products at unfairly low prices cost American jobs.
Trump’s tariff on steel may have hurt the auto industry, but it helped Lone Star Steel workers.
I heard Sen. Ted Cruz, R-Tex, attempt to explain the Trump trade push as it relates to the North American Free Trade Association.
“If he (Trump) just wants to take apart NAFTA for some personal reason, I am opposed to it,” Cruz told a rally in Jefferson, Tex. “But if he is doing this to get Mexico to lower their tariffs on US goods, so we can sell more there, I think that is a good idea.”
Two points should be taken from that statement.
1. If Cruz is uncertain what are Trump’s trade negotiation objectives, no wonder the rest of us are confused.
2. Foreign leaders from Beijing to Ottawa are also scratching their heads as they make the obligatory temper tantrum about being called out for unfair trade practices.
For too many years, these foreign countries played at being our friends while they kept their hands in our pocket. Trump is right to call them out.
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