Trump’s tariff critics deliberate over exaggerated and baseless concerns

Analysts in the market and the so -called economists who love President Donald Trump’s tariff It should be at least comfortable at extent that he agreed to stop stopping the people he wants to impose on Mexico.

But they should not be worried in the first place, because their fears are misplaced. Trump understands the harsh reality of the situation: other countries have taken advantage of the United States for decades, and America has long fought. In fact, Trump’s actions will greatly benefit the Americans.

In the first place, the idea that the customs tariff is always and everywhere travels to consumers is a fallacy, through both economic theory and history record. Factors such as changes in exchange rates mean that foreign producers usually end up pushing some (or most) customs tariffs.

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We forget that during the golden age of America, the government is completely funded by definitions; The income tax was not present. Instead of the customs tariff that causes indescribable economic catastrophe, coincided with the fastest levels of our sustainable growth – a time that built the middle class in America.

But today, both our friends and enemies alike are offended America International Trade And undermine its ability to prosper. For example, Mexico works with China to circumvent the customs tariffs and non -transmitted barriers (NTBS) in China and the provisions of abuse in the commercial deal between Mexico and Canada. This makes it impossible for American companies and American workers to compete.

A tariff for both Mexico and China punishes this type of unstable transactions and returns American exporters to a more level stadium. When asked about the customs tariff in the European Union, Trump said he would use the same playing book, which is right in that.

Mexico agrees to deploy 10,000 soldiers on the American border in exchange for stopping the customs tariff

Many European countries use plans such as VATS taxes to impose an implicit tariff on American exports. Moreover, countries such as Germany and Japan still have a tariff that was placed after the Second World War to protect the industries that are rebuilt after the conflict. The current situation has changed completely, and there is no reason for these countries to continue to punish American farmers and work factories.

We finally have a president who recognizes these facts and is implementing an approach to the islands and a stick to prepare the international model for America. Trump simultaneously makes production more expensive for production abroad and employing foreigners, while making it less expensive to produce it locally and employ Americans.

The cancellation of restrictions, low marginal tax rates, and abundant energy will all contribute to low production costs in the United States while the customs tariff will increase production costs abroad. How does this play?

China threatens revenge on Trump’s tariff

Looking at Canada, whose leaders are screaming around Trump’s defense of the Americans. If Canada agrees to cancel its definitions and NTBS, American exporters, such as dairy farmers, will be more competitive and will sell more products in Canada. This means doing more work and employing more Americans.

If Canada remains stubborn He insists on a commercial war, then Canadian products will be less competitive, and open the door for American producers, such as forests, to expand production and sell more locally while employing more Americans. Trump puts the American worker to be released in both directions.

As the economist Art Lavre noticed, there are no winners in commercial wars, but the losers can face a great difference. Almost all Canadian exports go to the United States, but only a small part of American exports go to Canada. If international trade slows down greatly, it will lead to severe stagnation in Canada, but it will be like a stumbling block in the United States

Trump imposes a tariff on imports from Canada, Mexico and China: “The state of national emergency”

In short, Trump carries all cards. He knows this.

But it is not just a matter of obtaining other countries to open their markets completely for American exporters; It comes to a trade deficit, which cannot last forever. Economic textbooks sometimes explain the deficit by noting that individuals often have a sharp trade deficit with retail stores, such as Walmart Or AmazonAnd this does not cause the individual bankruptcy.

Although this is true, this single commercial deficit is only possible in the long run because the individual has a huge trade surplus elsewhere, like his workplace.

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America’s deficit has long been funded by Federal ReserveWhich money has been effectively printed and sent around the world to finance our commercial deficit for decades. This process has reduced the value of the dollar over the years, so that the Americans’ money does not go to some extent – a phenomenon that we call inflation.

But the inflationary impact of our trade deficit has been justified by the status of the dollar as a backup currency in the world. If we suddenly lose it, America may face hyperplasia. For this reason, Trump threatened the customs tariff for countries that seek to dismantle the king’s dollar from his place in the matter of the world – it will be a quick end to the state of backup currency in the dollar catastrophic.

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Finally, Trump understands the name “free trade”. If we really want free trade, then why do you call it only in international markets? Why not home transactions either? In other words, if taxes on international trade are very bad, then why do we allow taxes on local trade – such as income tax, which is a tax on employment?

Free trade must be applied first and foremost Local trade Because we should focus on taking advantage of our citizens before we are concerned about these abroad. We do not hate foreigners – we just love Americans more.

EJ Antoni, an economist for general finance, is a Richard F. ASTER Fellow at the Heritage Foundation and an older colleague of prosperity.