Tariffs and the Moral High Ground

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Image: Gage Skidmore via Flickr, CC BY-SA 2.0.

Gage Skidmore

This is how the tariff war should be prosecuted.

Two plus two cannot equal both four and five.  In mathematics, there are questions that have only one answer.  Period.

But in economics, in philosophy, and in politics, there are indeed questions that can have apparently contradictory answers at the same time.

A cause may be incredibly difficult but still be worth trying.  A political position may lead to likely defeat but still be worth taking.  A quest may divide one’s base but still be worth launching.

The arena of world trade is one filled with such challenges, a multitude of contradictory or troublesome aspects at the same time.

A measure that’s necessary to create future exports, for example, may jeopardize current operations.  A measure that may pay dividends in four years may never get the chance if its cost is to put the exporter out of business today.  The path to prudence requires watching the present as well as the future.

When President Trump says that other countries are cheating us by placing either unfair tariffs or cripplingly expensive non-tariff barriers on United States exporters, he is telling the truth.  Europe’s CE Mark requirements, their REACH and RoHS regulations, and their VAT structure, for example, are all severe non-tariff “barriers to entry” that make the question of duty rates a rounding error by comparison, and make the very concept of “free trade” a joke.

When President Trump says Mexico and Canada are hotbeds of the drug trade, both manufacturing and exporting huge quantities of illegal drugs to the USA and elsewhere, apparently without nearly enough governmental opposition, he’s telling the truth.  We all know it about Mexico, but in recent weeks, news stories about the frustration of the RCMP and CBSA in combating this problem have revealed that President Trump was telling the truth when he included Canada in the charge.  Not to say it’s as major a source as Mexico is, but…with as long a shared border as we have with Canada, we have a right to expect our neighbors to try harder than they do.

When President Trump says that Red China is as unfair a trading partner as you can get, he’s not exaggerating.  The differences between our two nations’ legal systems, labor laws, and environmental protections are stark.  Beijing doesn’t just avert its eyes from intellectual property theft; Beijing encourages it.  Beijing doesn’t just allow slave labor; it literally decrees that the Uyghurs be enslaved.  Beijing doesn’t just tolerate improper favoritism for certain exporters and certain industries; it actively pursues “dumping programs” by subsidizing the exports of specific commodities to eliminate foreign competition, and it practices currency manipulation to increase its exports and reduce its imports.

These violations of WTO standards and other global agreements by America’s key trading partners are all demonstrably true and have generally been well known for years. 

Not only are we morally right to stand up and oppose these abuses, but it isn’t even only on our own behalf when we do so.  The entire world would benefit from our efforts toward truly reciprocal trade, fair trade, honest trade.

The largest of multinational companies can afford to set up their own subsidiaries in protectionist countries, establish their own plants there, pay off the locals by joining their economies with sales offices in-country.  Many of these methods don’t hurt the corporate giants directly enough to upset them.

It’s the small and medium-sized businesses that are hurt by these foreign trade barriers.  The intellectual property theft in China, the ever-changing consumer packaging regulations of Europe, the unclear rules of SASO in the Middle East — these things all cost the earth, and small businesses can’t afford to play in that sandbox.

The gradual loss of American manufacturing to foreign shores has forced American businesses to import parts from foreign countries to which they cannot afford to export their own finished products.  Too many American factories can manufacture an appliance or automobile in the USA, using components that they had to buy from China or Europe, but those same foreign countries won’t accept their finished products!  There’s always another regulation, another tax, another permission slip, another agency authorization, guarding the doorway, keeping these American goods out of their economies.

So do we have a right to start a trade war?  Do we have a right to do battle, in the business press and in the halls of diplomacy, and demand the fairness that has long been withheld, on behalf of not only the American manufacturing sector, but also on behalf of all the free market–minded entrepreneurs and unconnected small businesses across the free world?

Yes.  We have the moral high ground.

However, despite the reality of the problem and the genuine need for a solution, that doesn’t mean that this is the right time.

Both things can be true at the same time: There can be a real wrong that ought to be righted, and this can be the wrong time to attempt righting it.

At the moment, the United States of America are suffering in many, many ways.  The four-year train wreck of the Biden-Harris regime saddled the country with crippling inflation.  The Democrats decommissioned working energy plants to cripple the power grid, then repurposed huge swaths of agricultural acreage for costly and foolish wind and solar farms that will never produce the energy it took to install them.  The Democrats have spent generations weakening our workforce by shortchanging them with an intentionally substandard education, then ruined even their work ethic by shutting down workplaces and encouraging inactivity with the COVID-19 “pandemic.”

Before we try to right all the wrongs of the world, the United States have to recover.

The Trump administration rightly recognizes the need to cut our tax rates, to withdraw from the funding and management of certain foreign conflicts that are none of our business, to reduce the weight of the sheer cost of the federal government as its profligate spending cuts into our nation’s GDP.  The Trump administration rightly recognizes the need to lift the heavy jackboot of government off the throats of our private sector, by huge federal workforce reductions and by permanently taking away the pens of these unconstitutional regulators.

All this is good.  And all this will pay dividends, as the public expected when voting them in.

But all this will take time.

We need an economic boom tomorrow — no, today — no, yesterday.  Of all people, the Trump administration should recognize how desperately we need this recovery to take hold immediately.  And they do know how to do it; most of what they’re doing is exactly on track to set the plate for four solid boom years.

The one and only thing that could derail that effort is a global tariff war that makes our imported parts cost more at the same time it causes our export activity to crash.

American companies need to re-shore, to near-shore, and hopefully to on-shore — meaning to move our points of supply away from China, to other more friendly countries, at least, but hopefully, to our own country as much as possible.  It’s necessary for so many reasons — to reduce our dependence on an enemy (yes, China remains our primary enemy today), to protect us from the eventual supply chain disruptions when China goes to war with our friends (yes, China remains committed to starting wars of conquest someday, when the time is right), and to bring home the diverse manufacturing base we need to enable the American people to prosper again.

Everything else the Trump administration is doing — everything but the tariff war — serves this cause perfectly.  We can be an economic powerhouse again, but we have to allow these measures — on tax rates and spending and deregulation — enough time to work their magic.

Then, in a couple of years, we can and should raise the tariff issue again, when we can do so from a position of strength.

It’s time to pull back from the rhetoric and to pull back from these disruptive weekly announcements of new tariffs, and say, “Now, world, that we’ve got your attention, let’s sit down to negotiate.”  The goal of moving toward reciprocal tariffs is a worthy one, but it’s complex.  It’s going to take years. 

And only such a calm, non-disruptive course would allow the rest of the Trump administration’s measures the time they need to work their magic.

John F. Di Leo is a Chicagoland-based international transportation manager, trade compliance trainer, and speaker. Read his book on the surprisingly numerous varieties of vote fraud (The Tales of Little Pavel), his political satires on the Biden-Harris years (Evening Soup with Basement Joe, Volumes I, II, and III), and his most recent collection of public policy essays, Current Events and the Issues of Our Age, all available in eBook or paperback, only on Amazon.

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