We’re informed by America’s expert class that Donald Trump’s tariffs, money paid to the government when an item from overseas is purchased for use here, are disastrous.
We’ve been informed for 30 years by America’s expert class that consumption taxes, such as sales taxes, airline ticket taxes, gasoline taxes, etc. are good. In fact, one way to make America better would be to have a European-style 20 percent value-added (consumption) tax, i.e., money paid to the government when an item from overseas is purchased for use domestically (and also when a domestically produced item is purchased). Trump’s 10 percent general tariff plus California’s 10 percent sales tax rate (varies a bit by city/county) comes pretty close to the European average of 22 percent consumption tax (VAT).
Our elites also say that what would really deliver us the paradise on Earth to which we are entitled is a carbon tax. We consume too much, especially of transportation, and the result is epic CO2 emission. A consumption tax, especially for things that have to be transported long distances, would go a long way to healing our beloved Spaceship Earth. A tariff, of course, isn’t a laser-targeted carbon tax, but it is most certainly better than no tax at all for plastic being made in China and then shipped across the wide Pacific Ocean.
Finally, we’ve been told by experts for at least 20 years that we are undertaxed (our structural annual budget deficits certainly lend some credence to this theory!). The government needs more revenue of all kinds so that it can do great things for us.
Trump’s tariffs may simply be a prod to negotiating lower tariffs and non-tariff barriers in other countries to U.S. exports. But even if they were to be applied long-term, based on everything that elites and progressives have previously said, shouldn’t they be a positive for both the U.S. and for the world? Why the hysteria from Democrats when higher tax rates, carbon taxes, and more government revenue are precisely the things that they’ve been asking for?
A neighbor’s house this morning, below. Why wouldn’t a progressive celebrate discouraging the importation of a gas guzzling Porsche 911 like the one in the photo (daily driver parked on the street because the homeowner’s garage is presumably full with the valuable cars). This homeowner could have used a nudge in the direction of a planet-healing domestically produced Chevrolet Bolt instead.
The whole situation is almost as confusing to me as climate change alarmist Senator Mark Kelly’s switch from Tesla to pavement-melting gasoline-powered Chevy Tahoe. Trump has seemingly delivered almost everything that elite progressives have asked for and yet they’re forecasting a doom spiral.
Related:
- “Trade, Firms, and Wages: Theory and Evidence” (Amiti and Davis 2011), in which economists from the Federal Reserve Bank of New York, Queers for Palestine University (a.k.a. “Columbia”), and NBER, found that high tariffs boosted wages for workers “at import-competing firms”
“Trump’s tariffs may simply be a prod to negotiating lower tariffs and non-tariff barriers in other countries to U.S. exports.” Wishful thinking, in my opinion. At this point, the issue isn’t the tariffs—it’s the destruction of relationships with close allies and the erosion of trust that other countries and their citizens once had in our nation.
America doesn’t have a trade problem. The real problems we face are the deficit (driven by a predatory healthcare system), a struggling education system, and a crisis of values. Unfortunately, none of these issues appear to be a priority for the current administration.
(I will acknowledge one achievement, however—the effective elimination of capital gains. Bravo!)
Also, on the issue of negotiations: Let’s not forget that Japan attacked Pearl Harbor with the goal of forcing the U.S. to “negotiate for peace” and, among other things, lift its oil embargo. And sure, you could say Japan did achieve those goals—by 1946. After total devastation, unconditional surrender, and a couple of atomic bombs. So you could say that a brief period of catastrophic suffering did eventually lead to an era of immense prosperity.