During his campaign rally disguised as a State of the Union Address last month, Donald Trump claimed that his trade war and imaginary tax cuts were responsible for producing “the hottest economy in the world.” In reality, his words were nothing more than the rhetorical ramblings of a failed Republican president running for re-election because his trade war has created an economic hell that will take years to recover from.
In a nutshell, 2018 wasn’t as hot nor as prosperous as Trump would have you believe.
The stock market experienced a major “correction” near the end of last year causing the market to lose its gains for the year. Economic data from the Commerce Department showed a YUGE drop in retails sales. The Bureau of Economic Analysis just reported that growth in the 4th Qtr. of 2018 slowed significantly — a slowdown the Federal Reserve expects will get worse in 2019.
Now we learn from a new study conducted by economists at the New York Federal Reserve, Princeton, and Columbia that Trump’s trade war cost American consumers and importers $1.4 billion a month at the end of 2018.
Trade negotiators have just returned from China where the meetings on Trade were very productive. Now at meetings with me at Mar-a-Lago giving the details. In the meantime, Billions of Dollars are being paid to the United States by China in the form of Trade Tariffs!
— Donald J. Trump (@realDonaldTrump) February 17, 2019
While Trump likes to brag about the massive amounts of money flowing into the U.S. Treasury from trade war tariffs, the simple truth is that Americans are the ones picking up the tab. Using official data on prices and quantities of imports, the study found American consumers and businesses paid for the billions in tariffs Trump levied last year while overseas countries paid little to nothing.
Tariffs are no different than any other tax, meaning the associated costs are passed through and fall on those not directly involved. So, when the U.S. Treasury charges a country 25% to ship a product into the U.S., importers and their customers absorb the costs.
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
Economists and businesses don’t share Trump’s
optimism ignorance about trade wars being good and easy to win, and they continue to sound the alarm about how his protectionist policies will continue to hurt the economy. In fact, the study estimates that if current tariffs remain in place, approximately $165 billion in trade will be redirected per year.
As bad as Trump’s trade war is for the U.S. economy, it’s made worse when we realize that the GOP could have stopped him in his tracks. Instead, they surrendered to Trump — a surrender that continues even though they are the minority in the House.
About six weeks ago, Rep. Sean Duffy (R-WI) introduced the U.S. Reciprocal Trade Act, a bill that would give Trump carte blanche to level tariffs wherever and whenever he chooses without the need to consult with Congress. And since Trump mentioned the bill in his SOTU, I think it’s safe to say that the GOP will surrender again.
It would have been nice if Republicans had used their constitutional authority to rein in Trump’s out-of-control tariffs when they had the majority. But they would’ve had to actually do their job for that to happen, wouldn’t they?
David Leach is the owner of The Strident Conservative. His politically incorrect and always “right” columns are also featured on NOQReport.com.
His daily radio commentary is distributed by the Salem Radio Network and is heard on stations across America.