President Donald Trump’s recent tariffs on steel and aluminum have dominated the news cycle. For the most part, Democrats and unions are in favor, while Republicans, conservatives, libertarians, and the financial experts are opposed.
Where does Peter Schiff, who has railed against trade deficits in the past, stand?
He thinks the import levies will place the United States in an economic quagmire.
“Apart from overestimating America’s bargaining position, Trump and his supporters grossly misunderstand the nature of international trade and how Americans have benefited from a system that has allowed us to continually consume foreign goods on credit,” Schiff wrote on RealClearMoney.com.
Schiff argues that the tariff will place an added cost on domestic industries and consumers. He doesn’t believe that Trump understands how a trade war can negatively impact Americans’ living standards.
“It’s helpful to remember that a tariff is essentially a tax that will be paid by domestic consumers. It’s not like American producers will keep prices where they are and simply manufacture more steel to make up for the lost imports. Instead, prices will likely rise to almost the same level as the taxed imported products. Profits at American steel companies will increase, but production probably won’t,” Schiff wrote.
“Let’s hope that Trump’s bluster on trade is just a negotiating tactic. Maybe he’s crazy like a fox, and his threats will produce a favorable outcome for the U.S. But given his international unpopularity, and how quickly world leaders have mobilized for war, I wouldn’t count on it.”
In the end, the trade blunders will accelerate “our day of economic reckoning.”
Leave a Comment