https://washingtontimes-dc.newsmemory.com/?token=738064a695780dad95de00dbe1d86b3b_66fd4415_6d25b5f&selDate=20241002 Thinking through the Trump tariffs
Leveling the playing field to facilitate fair trade
By Peter Navarro
The Trump tariffs will make America and American manufacturing great again. Here’s what you need to know.
Every country cheats. When one country uses unfair trade practices to gain a mercantilist advantage over another, the mercantilist cheater gains factories, jobs, wage gains and growth in its gross domestic product at the expense of the other country.
We have lower tariffs and trade barriers than any of our major trading partners. Not coincidentally, we have the highest annual trade deficits.
Each of our trade partners cheats us out of jobs and factories in different ways.
For example, Japan uses a dizzying array of nontariff barriers to keep American automobiles and other highvalue- added production out of its markets.
Germany and other European Union nations gain an unfair advantage with a value-added tax that acts as a de facto tariff on the United States, which relies instead on an income tax.
Our second-largest trading partner, Mexico, is regularly breaking the rules of the North American Free Trade Agreement replacement that former President Donald Trump negotiated but which the Biden-Harris administration does not enforce.
Our largest partner, China, breaks every rule in the World Trade Organization book with its “seven deadly mercantilist sins” — intellectual property theft, export subsidies, currency manipulation, dumping, state-owned enterprises, pollution havens and sweatshops.
The U.S. trade deficit has reached nearly $1 trillion a year. That’s larger than our defense budget, almost 4% of our GDP and about 15% compared with the federal budget.
Trade deficits destroy American jobs, shrink domestic manufacturing, threaten national security through the erosion of our defense industrial base and reduce annual GDP growth.
Over time, trade deficits transfer massive amounts of our wealth to foreign countries.
When foreigners buy farmland, factories or real estate, they gain control over American economic assets, and the U.S. becomes increasingly dependent on foreigners for food production, industrial capacity and even housing markets — China already owns far too much of our food supply chain and housing.
Consider, too, from a national security perspective that the U.S. trade deficit with China is significantly larger than China’s military budget.
In effect, American consumers are financing China’s construction of aircraft carriers, fifth-generation fighters, hypersonic jets, nuclear weapons and personnel that may one day kill Americans.
Reducing America’s massive trade deficits through the Trump tariffs is key to boosting sustainable GDP growth. It encourages domestic production, reduces reliance on foreign imports and ensures that more wealth stays within the U.S. economy to be reinvested in jobs and industries.
The faux inflation argument is a cudgel that globalist publications such as Bloomberg and The Wall Street Journal like to beat Mr. Trump over the head with. In an election year, the Democrats are more than ready to pounce on this false argument.
Here’s the truth: The Trump tariffs did not cause inflation during his presidency. They will not cause inflation in Mr. Trump’s second term.
When America imposes tariffs on major trading partners such as China or Germany, the Trump tariffs force these trading partners to reduce the prices of their goods sold to us.
The American market is too important to their export-dependent economies for them to try to pass along the full tariffs to American consumers.
Over time, as the Trump tariffs bring our manufacturing and supply chains back on shore and American corporations invest more in American workers, real wages and employment rise, likewise moderating any possible inflationary effects.
Mr. Trump has proposed a 20% across-the-board tariff on American imports. With annual U.S. imports of nearly $4 trillion, such a baseline tariff would raise about $800 billion annually.
This is nearly equivalent to the U.S. defense budget for 2023. This incremental revenue would finance most or all of the annual federal deficit. At about 12% of total federal revenue, this tariff revenue could finance substantial tax cuts.
In the fog of this presidential campaign, do not be fooled by the facile arguments of the globalist elites who have told us for decades that tariffs are bad and free trade is the road to prosperity.
These globalist elites, financed by multinational corporations, feed us this free trade dogma as justification for sending our jobs and factories to Asia, Europe and Latin America. They always put their own profits above the American people.
Nowhere are the broken promises of the WTO, NAFTA and free trade better understood than in the battleground states of Michigan, North Carolina, Pennsylvania and Wisconsin — ground zero for the carnage wrought by free rather than fair trade.
Michigan has lost much of its auto industry, North Carolina its furniture and textile industries and Pennsylvania its steel industry. Wisconsin said goodbye to thousands of industrial machinery, paper production and electronics jobs.
Come Nov. 5, voters in these battleground states will welcome the Trump tariffs with open arms — as should the rest of this country.
Peter Navarro served as Donald Trump’s trade and manufacturing czar. Read more about Mr. Trump’s policies in “The New MAGA Deal” and at
www.substack.com/navarro
