As many remember from last December, President Trump scored a major victory among conservative voters, the GOP, and for our country alike when he passed the overwhelmingly inclusive tax cuts. The tax cuts saw an almost instant reaction, with over 460 companies (and counting) giving bonuses or pay raises to over 4 MILLION hard working people in America, according to atr.org.
After a year of a booming stock market and the amazing economic relief as mentioned above, one would think that President Trump mastered the economic part of the Presidency. One would think this too as the man has surmounted a net worth of well over $3.1 billion (via Forbes) even following a self-funded national campaign. And while I, along with many conservatives I know, commend Trump’s relatively sound and impressive economic agenda, we must realize the looming trouble of tariffs.
Earlier this year, President Trump announced a stiff tariff on washing machines and then later imposed a massive tariff regarding steel (25% tariff) and aluminum (10% tariff) in hopes of spurring an economic comeback of factory jobs, like the auto industry. As a patriotic American, I wince with pain when I see once booming cities filled with jobs from Ford collapse, however, the President must have skipped over past tariffs in the history books. Let’s take a look back at what happened in the past with massive tariffs.
To jog your memory, let’s look at tariffs passed under George W. Bush. In March of 2002, then-President George W. Bush sought to implement a steel tariff, ranging from 8-30%. The tariffs meant to jog production in the United States and create more jobs at home, however, they acted adversely. Bush wanted the tariffs to last until 2005, but economic advisors to the President strongly suggested he end the tariffs, which he did in 2003. A study by the Consuming Industries Trade Action (CITAC) found that almost 200,000 people lost their jobs due to this year-long tariff, and the U.S. International Trade Commission (ITC) found that “a central estimate of a welfare loss of $41.6 million” occurred due to the tariffs imposed by President Bush.
And who could forget the disastrous presidency of Herbert Hoover, the spearheader of the Great Depression? Who else remembers the Smoot-Hawley tariff on crops, which 1000+ economists urged him to veto? Despite this, President Hoover signed the bill into law, damaging an already frail American economy to nearly extinction. Wall Street suffered almost immediately after this disastrous legislation passed, and traces of the Smoot-Hawley tariff could attribute to the unfolding of the Dust Bowl.
To quote President Ronald Reagan from his joint address to Congress in 1983, “As the leader of the West and as a country that has become great and rich because of economic freedom, America must be an unrelenting advocate of free trade.” This quote should send an economic signal to our current administration and those representing us in Washington. Free trade encourages competition, keeps prices lower for the middle class American, and helps factory workers expand their horizons and get better jobs to support themselves and their families. Everything takes time.