Why Is the GOP Terrified of Tariffs?


Trade Deficits
Why Is the GOP Terrified of Tariffs?

USA -(Ammoland.com)- From Lincoln to William McKinley to Theodore Roosevelt, and from Warren Harding through Calvin Coolidge, the Republican Party erected the most awesome manufacturing machine the world had ever seen.

And, as the party of high tariffs through those seven decades, the GOP was rewarded by becoming America's Party.

Thirteen Republican presidents served from 1860 to 1930, and only two Democrats. And Grover Cleveland and Woodrow Wilson were elected only because the Republicans had split.

Why, then, this terror of tariffs that grips the GOP?

Consider. On hearing that President Trump might impose tariffs on aluminum and steel, Sen. Lindsey Graham was beside himself:

“Please reconsider,” he implored the president, “you're making a huge mistake.”

Twenty-four hours earlier, Graham had confidently assured us that war with a nuclear-armed North Korea is “worth it.”

“All the damage that would come from a war would be worth it in terms of long-term stability and national security,” said Graham.

A steel tariff terrifies Graham. A new Korean war does not?

“Trade wars are not won, only lost,” warns Sen. Jeff Flake.

But this is a historical nonsense.

The U.S. relied on tariffs to convert from an agricultural economy in 1800 to the mightiest manufacturing power on earth by 1900.

Bismarck's Germany, born in 1871, followed the U.S. example, and swept past free trade Britain before World War I.

Does Senator Flake think Japan rose to post-war preeminence through free trade, as Tokyo kept U.S. products out, while dumping cars, radios, TVs and motorcycles here to kill the industries of the nation that was defending them. Both Nixon and Reagan had to devalue the dollar to counter the predatory trade policies of Japan.

Since Bush I, we have run $12 trillion in trade deficits, and, in the first decade in this century, we lost 55,000 factories and 6,000,000 manufacturing jobs.

Does Flake see no correlation between America's decline, China's rise, and the $4 trillion in trade surpluses Beijing has run up at the expense of his own country?

The hysteria that greeted Trump's idea of a 25 percent tariff on steel and 10 percent tariff on aluminum suggest that restoring this nation's economic independence is going to be a rocky road.

In 2017, the U.S. ran a trade deficit in goods of almost $800 billion, $375 billion of that with China, a trade surplus that easily covered Xi Jinping's entire defense budget.

If we are to turn our $800 billion trade deficit in goods into an $800 billion surplus, and stop the looting of America's industrial base and the gutting of our cities and towns, sacrifices will have to be made.

But if we are not up to it, we will lose our independence, as the countries of the EU have lost theirs.

Specifically, we need to shift taxes off goods produced in the USA, and impose taxes on goods imported into the USA.

As we import nearly $2.5 trillion in goods, a tariff on imported goods, rising gradually to 20 percent, would initially produce $500 billion in revenue.

All that tariff revenue could be used to eliminate and replace all taxes on production inside the USA.

As the price of foreign goods rose, U.S. products would replace foreign-made products. There's nothing in the world that we cannot produce here. And if it can be made in America, it should be made in America.

Consider. Assume a Lexus cost $50,000 in the U.S., and a 20 percent tariff were imposed, raising the price to $60,000. What would the Japanese producers of Lexus do?

They could accept the loss in sales in the world's greatest market, the USA. They could cut their prices to hold their U.S. market share. Or they could shift production to the United States, building their cars here and keeping their market.

How have EU nations run up endless trade surpluses with America? By imposing a value-added tax, or VAT, on imports from the U.S., while rebating the VAT on exports to the USA. Works just like a tariff.

The principles behind a policy of economic nationalism, to turn our trade deficits, which subtract from GDP, into trade surpluses, which add to GDP, are these:

  • Production comes before consumption.
  • Who consumes the apples is less important than who owns the orchard.
  • We should depend more upon each other and less upon foreign lands.
  • We should tax foreign-made goods and use the revenue, dollar for dollar, to cut taxes on domestic production.

The idea is not to keep foreign goods out, but to induce foreign companies to move production here.

We have a strategic asset no one else can match. We control access to the largest richest market on earth, the USA.

And just as states charge higher tuition on out-of state students at their top universities, we should charge a price of admission for foreign producers to get into America's markets.

And — someone get a hold of Sen. Graham — it's called a tariff.

Pat Buchanan
Patrick J .Buchanan

Patrick J. Buchanan is the author of the new book “The Greatest Comeback: How Richard Nixon Rose From Defeat to Create the New Majority.

  • 13 thoughts on “Why Is the GOP Terrified of Tariffs?

    1. It depends on the old adage: follow the money. Who gets the tariff and who is being used? Lincoln favored the 1860 Morrill Tariff (39-51%)on southern exports meaning 1. Southern imports were more expensive. 2. Profits went to corporate welfare of Yankee industry and fishing interests. 3. Southerners were forced to buy inferior Yankee machinery because the better English machinery at the time was taxed beyond reach.
      So my question is: Who gets the money from this tariff? Who will benefit? The government promises where money will go such as the lotteries and in most cases it goes into some special interest’s pocket. More possibilities for graft. But the trade imbalance has to stop.

      1. @Mark, You ask, “…Who gets the money from this tariff? Who will benefit?” Money from tariffs go to the general fund, not a lottery or any special interest. The national security of the people of the United States will benefit. Meaning that our armed services will benefit, and those drafted to defeat our enemies in the next world war will benefit. Any more questions, Mark/

    2. Bring it on! the steel that China produces is second class according to those who use steel for fabricating. I hate buying products that say “made in China” on them. If it wasn’t for Trump we would still be going down the financial tube. Who cares what the RINO’s think.

    3. How about this;we engage in war with a country that is supplying us with steel & aluminum??We can not be dependent on anyone but ourselves to supply materials to make our military machines.Why can’t our supposed learned politicians see this???
      Just saying,
      Remain calm and return fire
      Gramps 38

    4. Most other countries have EXTREMELY HEAVY taxes duties or tariffs on good brought into their countries. The U.S. has become a dumping ground for cheaply produced steel and many other products from China and other low cost for production countries while our steel mills sit idle and skilled workers collect unemployment or run out of unemployment. In 2007 the tariff rates for Belgium, France, Germany, Italy and the U.K were at 5.2% while the U.S. was 3.5%, most others have grown substantially (many are now at 13% to 28% in 2018) while ours have been pretty much stagnant. Add duty fees and others charges and it is easy to see why the tariffs Trump is talking about are so badly needed. Like most other past practices, allowing others to send ANYTHING to the U.S. cheaply has done much more damage to the nation and it’s job/production standards. Time to level the playing field and stop the dumping process ! Competition is good, tariffs ON !

    5. “But if we are not up to it, we will lose our independence, as the countries of the EU have lost theirs.”
      Which is exactly why the Establishment Republicans oppose them. They are all Globalists of the first order.

    6. How can American corporations compete with third world nations that utilize child slave labor?! Is this why the US has sought illegals for cheap labor?!

    7. The answer is not to penalize companies that can produce for less but to reduce your own costs and improve efficiencies to compete. Reducing costs may include tax reform and a reduction in regulations. Granted, direct government subsidies of busines distorts the market place. Only then should tariffs be implemented. The US has its share of government subsidies and production constraints in certain industries.

      1. @Mark, These tariffs are not about commerce or costs. These tariffs are about maintaining the steel and aluminum makers for when the Third World War erupts. And it will erupt.
        When the next world war erupts, the 110 million Americans that will be drafted will need all the weapons that are made of the steel and aluminum made in the USA. So if you are under 60, you better support the tariffs that will protect our native steel and aluminum smelters.

    8. We should also do the same as other countries with immigration. If you want in, you must have a marketable skill and or money to start a business and employ local workers. Do the same here. If you want in, bring money and don’t expect to live off my dime.

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