Tariffs and Economic Nationalism

The PAC Perspective by Ted Flint

Definition of Economic Nationalism: “A protectionist ideology or policy that aims to foster and shape a national economy by promoting domestic industries and by shielding domestic producers from foreign competition.”

It is interesting to listen to the debates on both sides of the tariff issue. Admittedly, I am no expert on trade policy, but if those opposing Trump’s tariffs were to investigate the role tariffs have played in making America an economic juggernaut, they might rethink their position.

From the conclusion of the Civil War until 1913, America instituted tariffs, duties, and imposts to fund government operations. And we became an economic powerhouse, while free trading Great Britain became a second-rate economic power. Then, America replaced tariffs - taxes on foreign imports, with taxes on Americans’ income. 

The President stated at the outset that there would be some short-term pain, but that we would benefit in the long run. Without providing details the President said “we’re taking in almost $2 billion a day in tariffs. “He also claimed Japan, South Korea and other countries are “lining up to make deals.”

During the Reagan years, republicans tended to favor free trade, while democrats opposed it in favor of “fair trade.” It is ironic that Trump has changed the dynamic.

What Trump’s tariffs are effectively doing is killing Globalism, and THAT’S what the left so vehemently opposes. There are globalists in both major parties. Trump’s trade policies seek to put American companies and American workers first. That is what every other country does that uses tariffs. Why shouldn’t America do the same? President Trump is the first president in 50 years to liberate the country from asymmetrical tariffs, and by doing so, will usher in, as he puts it, “a New Age of Trade Parity.” Isn’t that one of the things that so animates the Left? They are obsessed with parity and equality, unless it benefits America, then somehow it is unfair.

Are Trump’s tariffs pre-emptive, or punitive? No, they are reciprocal. Meaning, whatever the percentage tariff a country slaps on American products going into its country, we hit them with the same percentage on their goods coming here. If tariffs are so destructive to a nation’s economic well-being, why are China, the EU, Russia, Mexico, India, etc., instituting tariffs on imports?

Throughout the 1980’s and 90’s free trade was the mantra in America. Then came the global trade agreements under Clinton: NAFTA (North American Free Trade Agreement) was a regional trade agreement between Canada, Mexico, and the United States, designed to eliminate barriers to trade and investment. GATT (General Agreement on Tariffs and Trade) was a multilateral agreement focused on lowering tariffs and promoting international trade. The WTO (World Trade Organization) is the successor to GATT.  We exported jobs and entire industries to other countries and were told that free trade benefits all countries. Clearly, it benefits some at the expense of others, chiefly the United States.

The president believes the tariffs will result in more economic opportunity for American workers and higher paying jobs for those who want to pursue them. As Victor David Hanson points out regarding Trump’s tariffs, “The world is angry,” which makes sense because “the world” has been running a trade surplus with America, while we have been running deficits. Those days are over. Already, countries have begun to rethink their trade policy vis-à-vis the United States. Treasury Secretary Scott Bessent said almost 70 counties have approached the Administration about reworking trade deals. 

There are strong arguments on both sides of the trade issue. Ayn Rand said tariffs “are a very improper form of government intervention into the economy.” And no conservative worth his salt wants any government meddling into the private sector. For those wishing to learn more about  tariffs, may I suggest Pat Buchanan’s The Great Betrayal? Here’s a passage from that book. Quoting a student of America’s tariff wars Buchanan writes: ”Protectionists prefer taxes on foreign goods, and free traders favor taxes on American incomes.” Which do you prefer?