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John Faso: Tariff Man

President Trump has had varying political positions over the past 30 years. In shifting his positions, Mr. Trump is not unique.  Times change; issues change as does public opinion. Emerson once said:  “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.”

In one area however, Donald Trump has been consistent:  tariffs.  In the 1990’s he railed against Japan and called for implementation of tariffs against that nation.  As President, Mr. Trump famously said, “trade wars are easy to win.”  He has been – no pun intended - the bull in the china shop, frequently breaking diplomatic niceties.  Say one thing about Donald Trump – he is not bashful about letting other nations know exactly where he stands.  In this respect, he is actually quite transparent.  For better or worse, he says exactly what he is thinking.

To his credit, President Trump has been quite explicit about China and its trade practices.  China has routinely stolen intellectual property from US companies and forced our companies to share trade secrets with Chinese partners.  While American consumers enjoy lower prices on consumer goods, this has come at a cost of domestic jobs.

The current spat between the US and China has the potential to bring a full-fledged trade war.  Mr. Trump has imposed 25% tariffs on a range of Chinese goods; the Chinese are retaliating particularly against US agriculture and threaten to reduce exports of certain rare earth materials which are vital components in a variety of high technology products produced here. While US farmers are bearing the brunt of the China impasse, the Chinese government has much more to lose than does the United States. Despite the rhetoric, both sides have domestic political incentives to get a deal.

Meanwhile, the US, Mexico and Canada are primed to achieve final passage of the revised North American Free Trade Agreement.  While Mr. Trump has been a long-time opponent of NAFTA, most economists who’ve studied the agreement conclude it has been a net positive for the three nations.  Trump threatened to abrogate the agreement unless terms were changed. 

While I don’t believe a president has the authority to unilaterally revoke the treaty, his threats brought the sides to the table.  The new NAFTA has mostly modest changes, but worthwhile ones nonetheless.  In particular, the changes for US dairy farmers are significant; some of the worst protectionist measures adopted by Canada in recent years which hurt our dairy farmers were dropped and the Administration can rightly take credit for this win.

Mr. Trump has also dropped the unreasonable tariffs he placed on Canadian aluminum and steel which adversely impacted US manufacturers while doing little to help domestic metals producers.

Then last week, Trump rolled a grenade into the likely passage of the new NAFTA agreement by announcing tariffs on all Mexican imports due to their failure to stem illegal immigration passing through Mexico from Central America.  These tariffs would be imposed on June 10 and would gradually escalate if illegal immigration isn’t halted.

In this regard, Mr. Trump is playing the hand he likes.  Acting unpredictably and going back to the leverage which he likes to use – tariffs. 

It is clear that there exists a genuine crisis at the border.  Illegal migrants, often with children, are coming across the border at rates of 70,000 to 100,000 per month.  Democrats in Congress are refusing to appropriate emergency funds to handle the crisis, which in itself is a scandal.  But Trump’s linkage of immigration to trade threatens to derail ratification of the new NAFTA. 

Trump is the tariff man.  Love him or hate him, he is consistent on this point.  Time will tell whether his consistency is as Emerson would say, “foolish”.

Former Representative John Faso of Kinderhook represented New York's 19th House district in the 115th Congress.

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.

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