My sense is that too many people are talking about tariffs from a political perspective or looking at everything as if we were in an Economics 101 class. It may turn out differently when we actually implement tariffs. Maybe President Trump will turn out to be right, as he has in so many other issues. Maybe he will succeed because he holds the big cards: the largest GDP and market in the world. In other words, everybody wants to sell here and will likely adjust to whatever we demand.
Let’s check this from Peter Navarro in a post written by Jeff Croure:
Inflation is not a concern, Navarro claimed because “foreigners” will “cut their prices” to “absorb” most of the additional cost because “we’re the biggest market in the world… and they have to be here.”
According to Navarro, the automobile tariffs will generate “$100 billion,” while the other tariffs will generate “$600 billion.” He maintained that it would lead to “The biggest tax cut in American history for the middle class.”
As Navarro explained, one of the major goals of the Trump administration will be to encourage American consumers to buy vehicles made in this country. He said there will be “tax benefits, tax credits to people who buy American cars.”
That sounds right to me. If a European car maker wants to sell in the U.S. he will have to persuade his government to treat the U.S. car maker equally. What other options does he have? Sell to another market? Shut down his plant because the cars cannot be sold in the U.S.? What about a winemaker? He can sell his wine in another market, have his countrymen consume the wine, or persuade his government to treat California wine the same way.
My guess is that tariffs will force other countries to negotiate with the Trump administration. The net result could be the “free trade” environment that many of us love to see. I supported NAFTA because I wanted free trade, but it hasn’t really turned out that way. Maybe tariffs will do what we always wanted to do.
So let’s give Trump a chance. Maybe he is right. I’d like to find out because we don’t have a level playing field now.
Once upon a time, we financed most of the federal government with tariffs. I’m not saying that we will return to that, but I do feel that we should give tariffs a chance. If it works then we will find out. If it does not then election night 2026 will be rough on the GOP.
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National Archives” src=”https://images.americanthinker.com/t0/t0yqlpltqqs3cj2yeg2x_640.jpg” width=”450″ />
Image: National Archives
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