A tariff is a sharp-edged tool used to carve out the best trade deals for America. It is used to raise the price of imported goods as a defense against unfair competition from foreign markets. And like any other tax, a tariff doesn't have to be universal or permanent: it can be limited, lowered, raised, imposed, and repealed as needed.
Even the saber-rattling threat to employ tariffs is so effective that it intimidates any nation who may harbor thoughts of fleecing the U.S.
In Article I, Section 8, of the Constitution the Founding Fathers gave Congress the power to "regulate commerce with foreign nations." The Framers encouraged sanctions, duties, and fees as legitimate revenue-raising measures: the second bill signed by President George Washington was legislation establishing tariffs; President James Madison proposed a five-percent duty on all imports; Thomas Jefferson admonished Congress in 1806: "We ought not to depend on supplies from other countries. Shall we suppress imposts [tariffs] and give that advantage to foreign over our own domestic manufacturers?"
Targeted import taxes allow domestic start-up companies to compete on a level playing field with state-subsidized foreign corporations. Case in point: Brazil produces nearly half of the world's sugar and uses that status as leverage to manipulate the market. According to Britain's Financial Times, the Brazilian government plans to underwrite its sugar industry to the tune of $1 trillion over the next ten years.
Tariffs, quotas, and embargoes also protect American manufacturers from foreign goods produced by forced labor and in sweatshops that "employ" children. In 2016, the Department of Labor identified 139 products from 75 countries using such practices.
New and higher tariffs would help finance a cut in income tax as candidate Donald Trump promised. If the price of some imports rise, trimming consumer tax bills would be a nice trade-off.
Conservative ideologues who fear using tariffs should note that Ronald Reagan levied a 100-percent tariff on selected Japanese electronics, a 50-percent tax on Japanese motorcycles being dumped on the U.S. market, and put quotas on Japanese auto imports, steel, and machine tools. He was an America-first free trader.
The failure to use tariffs effectively has resulted in a $58 billion trade deficit with Mexico. The U.S. trade deficit with China currently stands at $367 billion. China is flooding American markets with cheap goods but pays just about three percent on its exports -- Mexico averages 0.1 percent!
Last year, the U.S. charged $34 billion (1.5 percent) in duties and fees on $2.2 trillion in imports. This is a crisis that needs to be addressed: our total trade deficit amounts to $539.8 billion, up from $508.3 billion just two years ago, and shows no sign of tapering off. According to the Economic Policy Institute, between 2001 and 2015, there were 3.4 million fewer jobs for American workers due to mounting trade deficits.
President Trump wants to raise the admission fee for the privilege of doing business with the U.S. In doing so, he has proven to have an ear for Middle America's concerns.
" In a March, 2016 Washington Post poll on trade, 53 percent of Americans felt free-trade policies cost more jobs than created new ones.
" A July, 2016 CBS News/New York Times survey asked, "has the United States gained more or lost more because of globalization?" Thirty-six percent of respondents thought more jobs were created, while 56 percent felt free trade policies lose more jobs.
" Just last week, Rasmussen Reports polling revealed that "56 percent of voters agree with President Trump's decision to pull the United States out of the Trans-Pacific Partnership."
The 6,000-page Trans-Pacific Partnership deal is the largest trade treaty in U.S. history. TPP mandates would force the U.S., Brunei, Vietnam, Mexico, Malaysia, and other Pacific nations into a one-size-fits-all trade policy. The arrangement even encompasses such non-trade issues as food-safety standards, Internet-traffic regulations, restrictions on generic medications, and foreign supervision of U.S. financial transactions.
The Wall Street Journal estimates that by 2025, the Trans-Pacific Partnership will increase the U.S. trade deficit in auto assembly and car parts by $55.8 billion a year. "Free" (not fair) trade policies have American autoworkers competing against Vietnamese laborers who earn a minimum wage of 56 cents an hour.
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