As inflation remains at some of the highest levels recorded in decades, Republicans have tried to place the blame for the bad economic news squarely on Joe Biden’s shoulders while conveniently leaving out the fact that Donald Trump is primarily responsible for it due to his trade war and tariffs.
Shortly after Trump was elected in 2016, Federal Reserve officials expressed concern over his economic policies and how his aggressive changes in the areas of taxes, spending, and trade could become inflationary.
In the first round of his trade war in January 2018, Donald Trump placed tariffs on solar panel and washing machine imports, causing significant and immediate price increases. In the second round of his trade war in March 2018, Trump placed across-the-board tariffs on steel and aluminum, a move directly responsible for doubling the price of steel on US manufacturers and price-gouging by steel providers.
Facing heavy backlash for these actions from then-Sen. Ben Sasse and Sen. Mike Lee, Trump assured America that “trade wars are good, and easy to win.” He went on to say that “the steel industry is in bad shape” even though over 70 percent of the steel used in America at the time came from America.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
Trump’s billionaire Commerce Secretary, Wilbur Ross, assured consumers that tariffs would have a “trivial” inflationary impact because it only amounted to a few pennies on a can of soup or soda, and a few hundred dollars on a new car. And in his defense of steel tariffs and Trump’s trade war, Ross pointed out that these actions had been taken before.
Ross was right on that last part, but he conveniently left out the consequences of such policies.
Tariffs on steel were used by George W. Bush during his presidency and they created the same disastrous results we witnessed from Trump’s use of them. Bush’s steel tariffs caused prices for products using steel to rise 40 percent, resulting in the loss of tens of thousands of jobs while saving a meager 1700 steelworker jobs at a cost of approximately $800,000 each.
Trump’s misguided approach to free trade was destined to have a devastating impact on consumer prices and the economy. And while Republicans like to point out that record-breaking inflation has been happening on Joe Biden’s watch, Donald Trump deserves much of the blame because his trade war tariffs laid the foundation for the economic mess (via Reason.com):
Those tariffs … are adding roughly 0.5 percent to annual inflation across the economy. That’s the conclusion drawn by Ed Gresser, a former assistant U.S. Trade Representative who is currently the vice president and director for trade and global markets at the Progressive Policy Institute, a center-left think tank. Trump’s tariffs on washing machines, solar panels, steel, aluminum, and a host of Chinese-made goods are a “secondary but noticeable contribution” to overall inflation right now, Gresser writes.
That’s pretty much in line with what four economists at the San Francisco Federal Reserve warned in February 2019, shortly after Trump began slapping tariffs on various goods. “Imports from China are an important part of overall U.S. imports of consumer and investment goods,” they wrote. “Thus, tariffs on these imports are likely to have sizable effects on consumer, producer, and investment prices in this country.”
The one and only thing that tariffs do is raise prices. That is their only function. Politicians might want to deploy tariffs (to raise prices) for a number of reasons: to protect domestic industries, to influence where in the world individuals choose to invest, to retaliate against what they perceive as unfair trade practices from other countries, and so on. But all those goals—and tariffs are poor ways of accomplishing most of them—are second-order functions. To the extent that any of those things occur, they happen because tariffs raise prices. (Emphasis mine)
Unfortunately for Republicans, inflation created by Trump’s trade war became evident only one year after he launched it, well before Joe Biden became president.
Samsung North America CEO Tim Baxter said in a January 2019 interview with FOX Business that Trump’s tariffs had a negative impact on the prices of Samsung products.
“The industry actually ended up after the imposition of the section 201 [tariffs] about a $100 price increase on literally all laundry products. So, a category that was growing with the GDP is actually contracted in 2018.” (Emphasis mine.)
Did you notice he said that “the industry,” not just Samsung, had increased prices? Did you also notice that he said the industry “was growing” before Trump started his trade war?
According to estimates made by the National Taxpayer’s Union Foundation at the time, the total annual cost of Trump’s tariffs on consumers was $41.65 billion, an amount that exceeded the taxes Americans had paid for Obamacare ($34.6 billion).
Heading into the 2020 election, two years of Donald Trump’s trade war turned out just as predicted: the farm industry was decimated, manufacturing was in a recession, and 100% of the cost of tariffs had fallen directly on American businesses and consumers.
Another important factor contributing to Trump’s role in the explosion of today’s inflation crisis is the trillions of dollars he and the Republican Party spent to stimulate the economy following their overreaction to COVID.
Joe Biden does share some of the blame for record-breaking inflation: he refused to rescind Donald Trump’s trade war tariffs and he added trillions of dollars more to Trump’s trillions to continue stimulating an economy severely damaged by COVID tyranny. However, these actions by Joe Biden simply proves the one thing we’ve always known about the duopoly: Republicans and Democrats both want the same thing.
Donald Trump’s irrational and erratic behavior mixed with his egomaniacal narcissism did serious harm to the economy, and that’s simply the economic truth behind his trade war tariffs.
David Leach is the owner of the Strident Conservative. He holds people of every political stripe accountable for their failure to uphold conservative values, and he promotes those values instead of political parties.
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