Opinion

Six Simple Reasons ‘They’ Are Wrong On Tariffs

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Posted: Mar 04, 2018 12:01 AM
The opinions expressed by columnists are their own and do not represent the views of Townhall.com.
Six Simple Reasons ‘They’ Are Wrong On Tariffs

There was a simple reason why Donald Trump won the 2016 election. It wasn’t because Vladimir Putin was changing votes (though he didn’t.) It wasn’t because evangelicals voted for him in necessary numbers (though they did.)

The reason I felt strong enough about it the week of the election that I drew a map predicting how he would win—which states—and was correct, was far simpler than the wildest conspiracies you’ve heard. 

He connected with working people, and they trusted him. Particularly they trusted him in states with a lot of empty production plants. Like making a solemn vow, they trusted him to keep his word.

Last week the Heritage Foundation calculated that the Trump administration has fulfilled close to 64% of his campaign agenda. This week he took one more enormous step to completion: tariffs on steel and aluminum.

The blowback came immediately. From the Wall Street Journal to The New York Times,  CNN’s Jeffrey Sachs to Townhall’s Guy Benson the cries were all reflective of the same ominous warning. 

For the day job in talk media I began engaging people on all sides of the issue and there are six points that the fearful trade-war-mongers I believe are wrong about. At the very least I believe they may be overstating the case.

1. Trade war is not a given - The most repeated statement in the collective analysis thus far asserts that an all out trade war will soon follow the implementation of the tariffs. Certainly in theory a nation that faces import tariffs to the United States could retaliate. But variables on a combination of factors would be a more probable cause for such. With steel we are looking specifically at China-whose steel industry is in part supported by government subsidies and a labor market that can be paid pennies on the dollar for the work necessary. This alone prevents the discussion of “free trade” being in any way “fair,” because China is cheating. China is also dependent for the USA to be a recipient of up to 20% of their total export volume. Our steel production suffers as they cheat. But they do not have the total upper hand.

2. Products may not cost more - The assumption that our products will go up significantly in price is a realistic concern. But it is not an absolute given. In the immediate period of implementation according to some of the best  estimates the tariffs may raise the purchase price of a new car something close to $45, and a twenty-four pack of beer by .05 cents. But what happens if steel & aluminum production begins to match volume wise the amount we import from other world sources? Economics 101 teaches us that prices drop as inventory surges. If our steel production grows enough we could wipe out the gains mix-minused in our dependence on China.

3. The world doesn’t like it - Of all the pushback this reasoning is among some of the most inane. When the United States does what we have to do to shore up our markets, jobs, workers, and life we have less and less need to care what the world thinks about it. This isn’t hubris, this is independence. To be tied to China’s cheap steel, Saudi Arabia’s oil reserves, and the good graces of the global community fundamentally puts us at a more vulnerable position from an economic & national security standpoint. Like much of the rest of the Trump focus, America needs to shore up America’s capacity for whatever faces us, and being utterly dependent upon others doesn’t move us in that direction.

4. We shouldn’t pick winners & losers - This is an argument normally made when discussing competition between domestic companies here in the USA. Jonathan Hoenig, appearing on Neil Cavuto on Friday, repeatedly invoked this as some sort of determining factor as to why the tariffs should be prevented. But it’s an illegitimate argument. This isn’t picking one steel factory over another and using tax-payer incentives to cause one or the other to succeed. This is a fight for survival between a metal industry that has suffered enormous loss for the better part of multiple decades, and the slave labor of China. The winners in the near term are steel and aluminum workers.

5. The national security consideration - Those that have argued that a trade war is inevitable, seem to also forget the increasingly perilous hair trigger of real war that the globe is constantly on the edge of. If America were to find itself drawn into a conflict with North Korea or Iran, it is likely whatever degree of imports we get from China and Russia would immediately be frozen. Fifteen years ago more than a dozen aluminum smelters were in operation. Today there are only three and the entire capacity of one of those three is necessary just for the military and related technologies. We are more vulnerable than necessary, and increasing domestic production solves this vulnerability. 

6. Had to be (as it was) done in the correct sequence - Because of the rapid growth of the economy by rolling back some 2000+ regulations coupled with the very real impact that Trump tax reform is having now is the absolute right time to push for this “leveling of the playing field.” Most Americans will be more likely to accept an increase in the price of their next car by $45 if they know that Americans are benefitting. They are even more so if they have on average $90 more per week appearing in their pay check.

President Trump should not have surprised anyone with this announcement. He campaigned on the idea and it is keenly linked to why he won the rust belt and the nation. The tariffs are called “protectionist” by voices trying to scare the American people. But fear is unnecessary.

If the five preceding presidents all held the same position (which they did) but were unable to get it done due to economic stagnation, terrorism, etc. now is the perfect time to take it up and create a far more favorable playing field for our domestic metals industry as well as the workers who would love to show the world the pride they take in American Steel and Aluminum.

The tariffs are the right thing to do!