President Trump’s planned 25 percent tariff on steel imports and 10 percent tariff on aluminum imports may provide a temporary boost for those industries, but the tariffs will do tremendous long-term damage to the American and global economies. Tariffs raise the price of, and reduce demand for, imported goods. Tariffs ensure the preferences of politicians, instead of the preferences of consumers, determine how resources are allocated. This reduces economic efficiency and living standards.
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Some justify these economic inefficiencies as being worth it to save American jobs. This ignores how tariffs increase costs of production for industries reliant on imported materials to produce their products. These increased costs lead to job losses in those industries. For example, President Trump’s proposed steel tariff could cost nearly 40,000 jobs in the steel-dependent auto manufacturing industry. Tariffs also cause job losses in industries reliant on exports. This is especially true if — as is likely to be the case — other countries respond to President Trump’s actions by increasing tariffs on US products.
Many of President Trump’s critics do not themselves support true free trade, which is the voluntary exchange of goods and services across borders. Instead, they support the managed (by government) trade of NAFTA and the World Trade Organization (WTO). NAFTA and the WTO promote world government and crony capitalism, not free markets. Any libertarian or free-market conservative who thinks the WTO promotes economic liberty should remember that the WTO once ordered Congress to raise taxes!
Foreign manufacturers may make convenient scapegoats for the problems facing US industry. However, the truth is that most of the problems plaguing American businesses stem from the US government. American businesses are burdened by thousands of federal regulations controlling every aspect of their operations. The tax system also burdens businesses. Until last year’s tax reform bill, the US had the highest corporate tax rates in the developed word. The tax reform bill lowered corporate taxes, but the US corporate tax rate is still higher than that of many other developed countries.
The United States not only spends more on “defense” than the combined budgets of the next eight biggest spending countries, but also spends billions subsidizing the defense of developed counties like Germany, Japan, and South Korea. Bringing US troops home from these countries is an excellent place to start reducing spending on militarism.
The biggest cause of our economic problems is the Federal Reserve. America’s experiment with fiat currency has enabled a system based on private and public debt. This makes trade imbalances inevitable as the US government needs foreign investors to purchase its debt. Foreign investors get the money to purchase the US government’s debt by selling products to American consumers. A trade war could cause foreign investors to stop buying US debt instruments and could end the dollar’s world reserves currency status. This would cause a major economic crisis — but at least it would stop our shores from being flooded with “cheap foreign goods.”
President Trump’s claim that trade wars can be easily won is as credible as the neoconservative claim that the Iraq War would be a cakewalk. A trade war would likely push the global economy into a recession or worse. Instead of imposing costs on American businesses and consumers and putting those whose livelihoods depend on imports out of s job, President Trump should address the real causes of our economic problems: the welfare-warfare state, the IRS, and the Federal Reserve.
Its only free trade if both parties freely trade. When American businesses operate with one hand tied around their back overseas, its not “free” trade. Its exploitation. We are giving our wealth to other nations that we built through our own, internal, free trade.
Reciprocity at some level must be enacted. Ron Paul has been a gigantic influencer in my life politically. Still, he is an idealist and often has trouble translating his ideals into the messiness of reality. This is one of those times.
Mr. Paul didn’t even mention whether trade is currently free or not. Also, you can’t accomplish anything if you don’t win elections – and not just one congressional district in Texas. When the head of the steelworkers union says his members won’t forget Trump standing up for them, that says something. It’s not pure. It’s not pretty, but it’s reality. And all of the Republicans having a hissy fit about it aren’t rushing out to cut subsidies to agriculture – what with Iowa having the first presidential caucus and all.
Ron Paul is a good man, but history (which libertarians usually ignore) says that he is dead wrong about tariffs. America was most prosperous when it had a tariff wall and lots of manufacturing jobs…
I respect Ron Paul, but he is wrong on this one…
We have never had “free trade”. Foreign governments place trade restrictions on U S products while freely shipping us their products. The “Value Added Taxes” that many countries impose are a way for foreign governments to “protect” their industries. Most people are unaware that “value added taxes” are rebated upon export, while imports are slapped with the “value added tax”.
Another way is government regulation on imports. When a Japanese auto company wishes to sell cars in the USA, they submit each model for testing in a U S laboratory which certifies each respective model as meeting U S safety and emissions requirements. They are then free to import as many cars as they want. If an American car company wishes to import cars into Japan, EACH INDIVIDUAL CAR has to be “tested”. Japan does not have a “certification system” for imports and requires each car rolling off the ship to be individually “inspected”. This is the method Japan uses to keep out imports.
For an economy to truly prosper, consumers (employees, workers) have to be part of the equation. What good are “cheap goods” when you have outsourced (offshored) your manufacturing capabilities? What is the difference between making 5 million dollars and keeping your USA-based workforce employed (and able to purchase your goods) and offshoring (and getting rid of your US workers) for another mere million in “profits”? Message to all you wall street types and banksters. UNEMPLOYED AMERICANS DO NOT MAKE GOOD CONSUMERS.
Wall street types praise Wal-Mart for “keeping wages low and corporate profits high” while criticizing companies such as Costco for paying their employees decent wages (and still prospering handsomely).
The same thing happened in the last century when Henry Ford paid his employees $5.00 per day (when the average wage was $1.50 per day). Of course, the same wall street and banksters howled that Henry Ford would destroy capitalism by paying his workers a decent wage. The OPPOSITE happened. Henry Ford CREATED a good portion of the “middle class” (of which the wall street types and banksters are presently destroying). Henry Ford (among others) KNEW who was behind wall street and the banksters, published his findings and was roundly (and unjustly) criticized for speaking the TRUTH. Radio priest Father Coughlin had the same message and was muzzled by the Catholic Church…WHY??
We are at a “race to the bottom”. . .
Business “schools”, wall street, banksters and politicians–there are many more of us than there are of you . . .
As an aside, President Trump has the right idea. “Tit for tat” reciprocity is the only way to insure truly “free” and “fair” trade.
Ron is a nice man, a good man but has zero ability to put his theoretical libertarian ideas into practice in a messy world of irrational actors. E.g…..he forgets to mention that China charges a 25% tariff on US autos. We charge 2.5% reciprocally. So in a perfect world the displaced US Steel workers would be hired by auto makers benefitting from below market steel inputs. But of course that doesn’t happen. Why? A couple of reasons, extravagant “safety nets” allowing workers to wait for the steel industry to turn around and not go get a job in the auto industry or elsewhere. Unemployment Insurance is a crime delaying the creative destruction of the free market.
Paul and other critics also can’t see beyond the immediate issue……the end goal is zero tariffs, duties etc. Free movement of capital and yes even people. To get there we need to force other countries to join us in the free market (kicking and screaming if need be).
BTW Oba-Mao put in 500% tariffs on Chinese steel as recently as 2016 or 20X Trumps proposal. Did anybody complain? Of course not, the Chi-coms were dumping like a bear after a huckleberry binge.
One step back to make 10 steps forward.
we also need to stop domestic tariffs of a sort–
congress is about to bail out obamacare–
from the tea party–
The deadline for Congress to pass its fiscal 2018 spending bill is quickly approaching, and it is up to us to make sure all Members of Congress know how important it is for this budget to reflect our spending priorities.
There are three main problems with the spending proposals under consideration.
First, the amount of spending under consideration is far greater than our nation can afford. Over the next week, we must remind the Republicans in Congress that they campaigned on being fiscally responsible. Now is their chance to prove to us that they meant what they said when they promised to pursue fiscally responsible policies.
Second, Republicans are entertaining the possibility of including a years-long extension of DACA in the spending bill. DACA, Obama’s illegal non-enforcement of our immigration laws for so-called “Dreamers” (illegal immigrants who were brought here as children), does not belong in the spending bill, and should be addressed separately.
Third, Republicans are discussing the possibility of bailing out the insurance companies through the spending bill. When ObamaCare was passed, we correctly warned that it was an unworkable law that would wreak havoc on the insurance market. Over the past eight years, ObamaCare has proven to be every bit as bad as Republicans warned. Congress must understand that we do not want the upcoming spending bill to include any insurance bailouts. ObamaCare continues to fail, and it unfair to expect taxpayers to bail out insurance companies to prop up the law.
from the eagle forum–
March 8, 2018
Contact Your Representatives Now: End Obamacare!
Congress is moving on the newest budget bill to avoid a government shutdown by March 23. Even with a Republican majority in both the House and Senate, we may not see a Conservative budget. One of those reasons is that Leadership is considering a bailout of Obamacare. Remind Congress that we elected them to end Obamacare, NOT bailout Obamacare.
The “Affordable Healthcare Act” is turning out to be not so “affordable”. As premiums rise, some Republicans think that they need to throw our money at it. A proposed $30 billion of our taxpayer money will continue this damaging program and fund plans that allow for abortions. Language is already on the table to subsidize insurance companies who treat low-income patients and create high-risk insurance pools, giving yet another handout.
Lawmakers are still in negotiations and need to hear from you!
Call or email your Representatives to urge them to vote NO on any bailout of Obamacare in the upcoming budget bills (H.R. 3354 / S. 1662).
Email Your Congressman and Senators
Capitol Switchboard 202-224-3121
When people say “______________ is not the answer”, they rarely have any workable answer to propose in its place.
Wow. What a HORRIBLE article and HORRIBLE reasoning from Ron Paul. He sounds just like a Establishment Republican. If I didn’t know any better, I would swear Mitch McConnell or Paul Ryan wrote the article. Have lost a lot of respect for Ron. Really sad that he is towing the Establishment Republican party line. All the above commenters make excellent valid points. I will just say this. What we have done in the past ISNT WORKING!!! Kudos to President Trump for wanting to try something different and standing up for the American worker. We have lost millions of American jobs and thousands of American factories do to “free trade”. Unfortunately, Ron Paul refuses to acknowledge that. Ron said tariffs “reduce economic efficiency and living standards”. Ron, what about the living standards of the workers who used to work good paying/good benefit jobs in factories who have been laid off and the only job they can find are $8.00 an hour service jobs due to “free trade”??? Hasent their standard of living been reduced??? Ron, I am really, really disappointed in you.
You may want to leave yourself a little wriggle room. He has a long history of very unpopular stances that were borne out in time.
I’m sure we can all agree on the ” welfare-warfare state, the IRS, and the Federal Reserve” part.