Trade, Tariffs and Immigration
President Trump is doing long-term lasting damage to the American economy on three fronts – trade, tariffs and immigration.
As Americans, we benefit greatly from free trade – better products, better prices and more jobs. Adam Smith in the “Wealth of Nations” is responsible for debunking mercantilism and developing the theories of the market economy that undergirds the modern economy. We can sell the best American products overseas at competitive prices benefitting the American workers and buy the best products from foreign companies at the best prices for the American consumer. Since taking office, President Trump has withdrawn from the TPP (Trans Pacific Partnership), withdrawn from negotiations with the EU for a parallel free trade treaty with Europe, and threatened to withdraw from NAFTA, our trade agreement with Mexico and Canada – all designed to reduce or eliminate barriers to free trade. Despite his claims to be a vaunted dealmaker who can negotiate better deals, he has not done so. Meanwhile Japan and the EU have just completed free trade deals. China has successfully negotiated free trade agreements with the ASEAN nations and many South American countries and African nations. China is taking the lead on developing the new “Silk Road” to facilitate commerce between Europe and Asia.
Tariffs are basically a tax on foreign goods. They add to the purchase price to American consumers. President Trump started with a large 20 to 50% tariff on solar panels and washing machines, then moved to add a 10 to 25% tariff on steel and aluminum imports, then added a tariff of 25% on $50 billion in Chinese manufactured goods and is now threatening to impose a large tariff on cars manufactured overseas, in Mexico and Canada and to impose additional tariffs on $200 billion in Chinese goods. Trump is starting trade wars with China, the EU, Canada and Mexico – our most important trading partners. This is already disrupting global trade and creating great uncertainty for American businesses. Trump is imposing these taxes without congressional approval, claiming the authority to do so for reasons of national security. Needless to say our closest allies in Canada and Europe are outraged to be declared a threat to our national security.
Trump has also sought to reduce legal immigration by half, eliminate illegal immigration, deport undocumented workers, and immigrants from Haiti, Honduras, Nicaragua and El Salvador. Recently he has attacked asylum seekers and separated children from their parents seeking to emigrate to America. Immigration is a great benefit to the American economy and our society. It adds new entrepreneurs, new workers, new cultures and greater economic growth. While some immigrants do commit some crimes, their crime rates are far less than crime rates of US citizens. Immigrant workforces are particularly important to the long-term health of the American economy due to our low birth rates, aging population and resulting financial pressures on financing Medicare and Social Security.
Many of Trump’s policies find support among business leaders, labor unions and workforces in industries like steel and auto and textiles struggling with foreign competition. Trump’s new mercantilism, isolationism and neo-protectionism are not the answer; erecting trade barriers will damage our industries and our economy and make us less competitive. We are a highly developed economy, but we cannot hide behind trade barriers and immigration walls and expect to prosper; we need to sharpen our competitive capacities in these industries, not wall them off from international competition. We need to welcome immigrants that build our competitive edge. We need to assist workers in sunset industries in making the transition to the fast growing elements of the new economy. We need to promote the industries of tomorrow, not cling to outdated technologies. We need to improve our educational outcomes and our vocational training so we can excel, not retreat into sullen mediocrity or ultra right wing rage against the “other”. Trump and his enablers are a challenge to America to find, build and nourish our better selves, so let’s do it every day.
Prepared by: Lucien Wulsin