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National Review

13 Sep 2024

The Editors

Trump’s Terrible Tariffs

https://www.nationalreview.com/2024/09/trumps-terrible-tariffs/

Donald Trump has been all over the map on tariffs. When he was president, his primary tariff efforts were on steel and aluminum in general and his \u201ctrade war\u201d with China. Taxing basic inputs to U.S. production such as steel and aluminum was bad for manufacturing firms and caused net job losses</a>. The trade war with China has done little to change China\u2019s behavior and has denied American exporters market access.\n

Perhaps the strongest indictment of Trump\u2019s trade policies is that Joe Biden looked at them and thought they were worth continuing.\n

Now on the campaign trail, Trump has talked about a 10 or maybe 20 percent tariff on all imports, with higher rates on Chinese imports and certain other specific goods, such as electric vehicles. That last item is copying Biden, who announced higher tariffs on electric vehicles earlier this year.\n</Connatix>\n

Trump has said in the past that tariff revenue would help to offset the budget deficit, or maybe replace the income tax entirely. More recently, he has said tariff revenue would instead go into a newly created sovereign wealth fund.\n

The sovereign wealth fund is another idea he shares with Biden, whose administration has been toying with creating one. The appeal for Democrats is obvious: It would give them a new way to fund green-energy projects with public money without having to bother passing legislation in Congress.\n</AdUnit></MoreInTag>\n

The idea that the world\u2019s largest and most diversified economy needs a sovereign wealth fund to direct investment \u2014 on top of all the government direction of investment that already takes place through other channels \u2014 is preposterous. Countries such as Norway or the United Arab Emirates have them because they have small populations, oil wealth, and otherwise nonexistent economies. Countries such as Saudi Arabia and China have them because they are authoritarian. Neither should be a model for the U.S.\n</AdUnit></TopStories>\n

Trump\u2019s platform says the tariffs would be levied \u201con Foreign Producers,\u201d and vice-presidential nominee J. D. Vance has been making the rounds saying that because inflation was low during Trump\u2019s presidency, that proves that tariffs don\u2019t cause inflation.\n

Tariffs don\u2019t cause inflation, strictly speaking, because inflation is caused by an increase in the money supply, something tariffs have nothing to do with. Tariffs do, however, cause price increases for the things on which they are levied because \u2014 follow this next part carefully \u2014 they are taxes. And tariffs on all goods from all foreign countries would cause much more significant price increases than the already existing tariffs on steel and aluminum and goods from one foreign country.\n

Make no mistake: Protectionists want tariffs to cause price increases. Trump\u2019s platform says the purpose of his trade policy is to \u201cprotect American Workers, Farmers, and Industries from unfair Foreign Competition.\u201d If tariffs don\u2019t cause price increases, because foreign producers lower their prices to compensate for the tax, then domestic producers aren\u2019t protected by the tariff, because the price for the foreign good will be the same one Americans are already willing to pay.\n</AdUnit></MoreFromAuthor>\n</AdUnit></MoreInTag>\n

The Trump administration\u2019s trade representative, Robert Lighthizer, has been open about his desire to increase prices. In a speech outlining his trade philosophy at a 2022 conference, he\u00a0 said</a>, “We need to change the focus of our policy away from price optimization,” and, \u201cOur primary objective should be policies that will build strong American families and communities and create productive high-paying jobs. That should be our goal, not cheap stuff.\u201d In the Q&A that followed, he\u00a0 said</a>, \u201cThe best way to fix consumerism is to raise prices.\u201d\n

While Trump says foreigners pay tariffs, Vance\u00a0 said</a>\u00a0that actually American businesses\u00a0would\u00a0pay tariffs, but only the ones he doesn’t like. \u201cWe need to lower taxes on corporations that are creating jobs in this country and raise tariffs on corporations that are shipping jobs overseas,\u201d he said. How the government would levy tariffs only on certain corporations, or how the tariffs would undo the outsourcing, was left unsaid.\n

In this projected reworking of U.S. tax policy, the Trump campaign has not consistently been able to explain who would pay the tax, what it would be levied on, what the rate would be, how the revenue would be used, or what the economic effects would be. Other than that, it\u2019s a fine idea.\n","protected":false},"excerpt":{"rendered":"

Perhaps the strongest indictment of his trade policies is that Joe Biden looked at them and thought they were worth continuing.\n","protected":false},"author":149,"featured_media":1701298,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"hide-more-from-author":false,"disable-remixd":false,"hide_top_stories":false,"headline_variations":[],"coral_asset_id":"","_cr_original_post":"","_cr_replace_post_id":"","_cr_replacing_post_id":"","_links_to":"","_links_to_type":0,"original-print-title":"","hide-nrplus":"1","social":{"tweet":"","share-chart":false},"footnotes":""},"categories":[5911,1389],"tags":[2556,7947,7380,2206],"section":[615],"coauthors":[170],"class_list":["post-1701225","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-business","category-politics-policy","tag-donald-trump","tag-protectionism","tag-tariffs","tag-taxes","section-article"],"share_buttons":{"facebook":{"title":"Share on Facebook","href":"https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fwww.nationalreview.com%2F2024%2F09%2Ftrumps-terrible-tariffs%2F"},"twitter":{"title":"Share on Twitter","href":"https://twitter.com/intent/tweet?url=https%3A%2F%2Fwww.nationalreview.com%2F2024%2F09%2Ftrumps-terrible-tariffs%2F&text=Trump%E2%80%99s%20Terrible%20Tariffs"},"flipboard":{"title":"Share on Flipboard","href":"https://share.flipboard.com/bookmarklet/popout?v=2&title=Trump%E2%80%99s%20Terrible%20Tariffs&url=https%3A%2F%2Fwww.nationalreview.com%2F2024%2F09%2Ftrumps-terrible-tariffs%2F&utm_campaign=tools&utm_medium=article-share&utm_source=https://www.nationalreview.com/"},"whatsapp":{"title":"Share on WhatsApp","href":"https://wa.me/?text=Trump%E2%80%99s%20Terrible%20Tariffs%20https%3A%2F%2Fwww.nationalreview.com%2F2024%2F09%2Ftrumps-terrible-tariffs%2F"},"copylink":{"title":"Copy Link","href":"https://www.nationalreview.com/2024/09/trumps-terrible-tariffs/"},"email":{"title":"Email this article","href":"mailto:?body=Trump\u2019s Terrible Tariffs https://www.nationalreview.com/2024/09/trumps-terrible-tariffs/"},"printer":{"title":"Print this article","href":""}},"authors":[{"include_full":false,"id":145605,"description":"