President Trump has been trying to fulfill his campaign promises on trade through the heavy utilization of the tariff instrument that has not been used this extensively since America was a weak economic power in the 19th Century and before. His pursuit of tariffs against friends and foes alike aspires to bring U.S. trading partners to the table to make better deals for our country.
The selling point in Trump’s concept of trade and tariffs is that it punishes trade partners for the creation of a negative trade balance against the United States by increasing the price they pay for the goods they export to this country. Nothing can be further from the truth.
What tariffs do is increase the price of these goods for the American consumer. The President has been saying that the national treasury is getting billions of tariff dollars from our trading partners and that he very much likes that.
The truth is that the money jingle one might hear as money goes into the U.S. Treasury are American dollars paid by hard-working people in this country. Tariffs represents an extra tax of 5, 10, 15, 20 and 25 percent that must be paid when we go to a store or dealership to buy imported products.
We have the President to thank for that as he is doing it on his own authority and without congressional action. Remember the drastic tax-cut he engineered for corporations and the rich 1 percent and then left the rest of us holding the bag at income tax filing time?
Well, you can add the tariff to the tax burden borne by the American consumer. Playing with tariffs is like playing with taxes that in the end will hurt especially the middle class that makes the country great.
The latest in this game of “how much you want to pay in taxes this year” is with Mexico where our cars are made and over 50 percent of fruits and vegetable are grown. Only this time the President went further than the use of tariffs to resolve trade imbalances as he is using this instrument to threaten Mexico on immigration outcomes.
Remember the campaign slogan, “We will build a wall and make Mexico pay for it”? How did that go?
Now the President has tried to use the tariff tax to make Mexico change its immigration policies and shutoff the traffic of people coming from Central America. That is a step too far even for his congressional Republican allies that sought to persuade him of the folly of his threat.
Because he was losing the support of his constituency, Trump backed down and still is claiming victory because the Mexican government promised to do something about its southern border. The fact is that Mexico has been trying to create a new national guard that has been tasked with work at Guatemalan border and is having trouble staffing it by trained professionals from the other military services.
Meanwhile the Latino community in the United States is increasing its leadership profile, its representation in Congress and its political voice. You do not see them in the streets as much because they have the power to strongly influence political outcomes at the ballot box and in the halls of government.
The heavy reliance on tariffs is an important sign of a country that is weakening in the control of its global markets and the international rules that make fair trade possible. It also isolates an America that needs its friends around the world.