That is, they’re becoming a drag on the economy and will take away a lot of the economic activity that was stimulated by the tax cuts enacted earlier. Warren Meyer says that it’s time that congress reclaimed the tariff powers it has outsourced to the executive branch over the years:
I Know Congress Hates To Challenge A President of Its Own Party, But…
…Congress simply has to pare back the tariff authority it has delegated the President. It is simply insane that Trump can just unilaterally impose 20% tariffs on foreign automobiles, a $200 billion new tax on US consumers.
It is appalling to see Trump following the usual blue model of economic regulation, imposing one intervention after another, each meant to fix the unintended consequences of the last intervention. Steel tariffs increased costs to domestic auto makers, so Trump proposes tariffs on foreign autos. When tariffs result (inevitably) in counter-tariffs on US agricultural exports, Trump proposes more agricultural subsidies. People (not me) lament gridlock in government and want more fluid lawmaking — well here it is. And it sucks. It is mindless and reactive and emotional and totally ignorant of economics.
These tariffs, when combined with earlier actions, will result in tax increases on consumers that swamp the tax cuts Trump and the Republicans were so proud of last year.
Jon Gabriel on the most recent “fix” for one of those unintended consequences:
A few months back, President Trump declared that “trade wars are good, and easy to win.” Now, just as nearly every economist on the left and right predicted, Americans are being hurt.
The White House slapped tariffs on imported steel and aluminum. China retaliated with planned tariffs on soybeans, meats and various agricultural products. Mexico, Canada and the European Union also struck back at farm goods and other U.S. exports.
A smart leader would notice his mistake and end the destructive policy. Instead, Trump declared that “tariffs are the greatest” and created a multibillion-dollar federal program to mitigate a small part of the mess he created.
Since Agriculture Secretary Sonny Perdue estimated $11 billion in damage to the industry, he announced a $12 billion payoff to make up the difference.
The administration used emergency executive powers created during the Great Depression; that way Congress wouldn’t get to weigh in.
“This is obviously a short-term solution that will give President Trump time to work on a long-term trade policy and deal to benefit agriculture as well as all sectors of the American economy,” Perdue told reporters.
It’s certainly short-term, but hardly a solution. Trade deals and networks are disrupted, farmers can’t plan for the future, and non-agricultural industries are still losing money. Not to mention all the American consumers watching prices rise on all sorts of household goods.
But red states have a lot of farmers and the midterms are just three months away. Maybe borrowing a few billion dollars will hide enough economic pain to convince voters to keep Republicans in power for two more years.
