President Donald Trump is trolling the public again on Twitter, attempting to perturb the pro-trade, anti-tariff crowd – or so it seems.
On Wednesday, President Trump tweeted that the U.S. was founded on tariffs:
Our Country was built on Tariffs, and Tariffs are now leading us to great new Trade Deals – as opposed to the horrible and unfair Trade Deals that I inherited as your President. Other Countries should not be allowed to come in and steal the wealth of our great U.S.A. No longer!
— Donald J. Trump (@realDonaldTrump) August 15, 2018
Yes, Trump is correct to say the U.S. used tariffs to grow the nation, but this was before the federal government installed the income tax and a myriad of other odious types of taxes.
Moreover, the Founding Fathers were proponents of free and uninterrupted trade without taxation.
From Time:
When Americans declared independence in July 1776 , they demanded a state that would promote the free movement of goods and peoples. Those who drew up the Declaration of Independence condemned Britain’s monarch, George III, for “cutting off our trade with all parts of the world.” The British government had long maintained tariff and non-tariff barriers to trade with the French and Spanish colonies in the Caribbean and South America. By doing so, it deprived Americans of a vital outlet for their products and access to hard currency. This was why, in 1775, Benjamin Franklin had called for Britain to “allow us a free commerce with all the rest of the world.” And why Thomas Jefferson called on the British imperial government not “to exclude us from going to other markets.” Freedom of commerce, accompanied by state support for the development of new industries, was a central tenet of America’s founding document.
The Founders’ commitment to free trade stands in stark contrast with Trump’s recent declaration of “American Economic Independence.” Trump insists that his economic program echoes the wishes of the Founding Fathers, who “understood trade.” But Trump’s economic agenda is the reverse of that advocated by the authors of the Declaration. Like the British government of the 1760s, Trump focuses narrowly on America’s role as a “dominant producer.” He is right to say that the Founders encouraged manufacturing. But they did so by simultaneously supporting government subsidies for new American manufactures and by advocating free trade agreements, like the Model Treaty adopted by Congress in 1776 that sought to establish bilateral free trade. This was a far cry from Trump’s call for new tariffs.
One more thing: nobody is coming into the U.S. stealing the nation’s wealth. Everyone is getting richer in the U.S. because of trade.
Trump stated that the US Military will be the most powerful ever. Ever, would include World War II. Trump also decries the trade deficit and repeatedly gives incorrect figures for the deficit by saying only the import figures, rather than the correct deficit amount which is net imports which = imports – exports.
During World War II the US ran enormous trade deficits with the non-combatant countries. Thus, essentially all steel and aluminum made is the US during the war went to military uses. Civilians could not buy new cars, etc . No steel or aluminum, and much of anything else was exported to counties not actively involved in the war. However, countries such as Mexico and Brazil were happy to export as much to the US as they could produce. Thus, the US ran enormous trade deficits with those countries.
Regardless of one’s opinion on the proper amount of military spending, the old “guns and butter” analogy still holds. One aspect of that analogy is that resources used for military purposes cannot be used for civilian purposes. Thus, a way to have a society have the most powerful military ever and still not deprive civilians of anything, is to buy the resources from foreigners. Paying for the net imports that replace resources devoted to the military with borrowed money, makes it even less conspicuous.
Protectionism is the progressivism of fools. Gandhi was a great statesman but a horrible economist. Just as the ignorant in the USA argue that American workers who earn $15 per hour should not have to compete with Chinese workers who make $2 per hour, Gandhi thought that Indian workers should not have to compete with American and European workers who have the benefit of modern machines. As a result, India adopted protectionism. In 1947 the per capita income of India was similar to countries such a South Korea. By 1977 the per capita income and standard of living in South Korea was many times that of India. India has since largely abandoned protectionism and has benefited immensely from free trade. Just as David Ricardo proved would be the case when he developed comparative advantage…”
https://seekingalpha.com/article/4148256