The Trump administration pulled back from the brink of disaster in trade relations with Mexico — but there is reason to doubt that this unusual display of good sense indicates a change in intellectual orientation, much less a lasting shift in policy. The man-made trade mess of the last year and a half is likely to get more bizarre before it gets better.
Should these threatened tariffs come to pass, it will be hard to argue that we have seen a more anti-business U.S. President, from either party, in recent memory.
The greatest risk to the US dollar may, in fact, come from within. The imposition of tariffs and sanctions create an opportunity for other countries to engage in bilateral trade. The decision to withdraw from the free trade initiatives such as the TPP and T-TIP weakens not only the prospects for US trade but also the preeminent position of the US dollar.
Knowing and seeing the pattern here makes it no less alarming but it does help reveal that these economic/political cycles are not arbitrary. And if history is our guide, we can also see that the efforts of the reactionaries against freedom will fail.
The prospect that the US president would conclude that tariffs cause growth has always been the downside of good economic numbers. Good performance of the macroeconomy only encourages his worst instincts to impose more harmful trade policies.
Anyone who maintains that a $75 billion income tax cut helps the economy must also agree that a tariff hike of $45 billion or more must harm the economy. This study looks back on the unprecedented developments in international trade that happened in 2018.
National economic statistics in a global economy are already suspect, even more so when we are talking about products that depend for their very existence on international supply chains. At this point in history, where trading relationships cover every nation and production structures are infinitely complex, such data literally make no sense.
We take for granted the miraculous ability technology has now given us to travel to and communicate with virtually any place on the planet in little or no time. Yet we allow governments and their bureaucracies to use their coercive powers to constrain us from having the full freedom to create, produce, trade, and travel to pursue our mutually beneficial purposes and cooperative plans to peacefully and productively make our lives better.
Talk of “our” balance of trade is talk of something that doesn’t really exist; it’s merely a figment of the imagination made to appear real by an accounting convention that has the name “trade balance.” Nevertheless, this fictitious creature is daily demagogued by those seeking to clear the way for protectionist interventions.
Either the president still doesn’t understand that American consumers pay a large chunk of these tariffs (and that these tariffs are bad for the overall U.S. economy) or he is truly proud to penalize Americans who buy foreign goods that he doesn’t approve of.
Want to become a champion of liberty? Eschew historicism. Be suspicious of grand millenarian eschatologies. Learn to love the little things in life. Celebrate every individual’s right to choose how they live their lives. Smile when you think of every box of chocolate given and received this February 14th.