Rebalancing trade matters to the little guy.

President Trump promised workers in the U.S. that he would fight to reduce unnecessary regulations, simplify the tax code and fight for American prosperity.  He promised to fight to protect American jobs.  He said that he wouldn’t forget the American worker.  Lately, President Trump is getting bad press for his efforts to negotiate with China to reduce our trade imbalance with them.  Why would he do that? And who will likely benefit and who might experience harm?

According to Roger L. Ransom in Coping With Capitalism: The Economic Transformation of the United States 1776-1980, “Tariffs save jobs.”(1)  And that’s just what the American worker needs right now.  Alexander Hamilton during the classical liberal period in early America raised most U.S. revenue through tariffs on incoming goods when he used his American System.  His system of tariffs helped to protect American manufacturing and agriculture.  In fact Hamilton’s American System may have inspired China to add tariffs to foreign products in order to protect Chinese industry.(2)

In the recent past, other American presidents have tried to negotiate with China to reduce its tariffs on American products by asking for a change in China’s policies.  But no change happened.  Trump is trying to renegotiate by raising tariffs on Chinese products in order to make trade more fair and reduce the trade deficit.  This policy goes along with his new tax policy to encourage more products to be made here in the U.S. where making these products will employ U.S. workers.  He may succeed where Bush and Obama failed because he was able to pass the new territorial tax system first.

Who will likely benefit and who might experience harm as tariff policies change?  Since the economy is a complex adaptive system under stress, the economy may change in surprising ways.  Outsourcing may become less profitable.  Some workers may gain and others may lose employment because global corporations will be stressed by changes caused by new tariffs.  Growing jobs by changing our tax policies and now adding tariffs will move our complicated economy towards new outcomes but it will take some time for some changes to happen.  Other changes may be quicker.  Some products from abroad will become more expensive and that may discourage Americans from buying some of them.  But President Trump is changing our trade policies in a way that may eventually help American workers to get a job and keep a job.

If you want to learn more about the American economy and our politics pick up a copy of Political Catsup with Economy Fries at Amazon.com, today.

(1)  Roger Ransom, Coping With Capitalism: The Economic Transformation of the United States 1776-1980, Prentice-Hall, Inc., Englewood Cliffs, NJ, 1981, p.162.

(2) Mel Scanlan Stahl, Political Catsup With Economy Fries: Liberalism, Pragmatism, Opportunism, Fast Car Publishing, Spokane, WA, 2015, p. 13.

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