Donald Trump is Herbert Hoover
By Dr. Harold A. Black
blackh@knoxfocus.com
haroldblackphd.com
Donald Trump has this penchant for calling his opponents names. Although this is not presidential, there was scant little about Trump that is “presidential.” Democrats are ridiculed like Elizabeth Warren as “Pocahontas,” Hillary Clinton as “Crooked Hillary” or Joe Biden as “Sleepy Joe” He hasn’t spared Republicans either. There is Ron “DeSanctimonious” and now Nikki “Birdbrain” Haley. Trump, never the statesman, has called out Haley’s supporters telling them that they are not welcome to join his supporters. This is just plain stupid. Trump’s base is not large enough to get him reelected. Trump should be trying to unite all those who want a regime change from the present group running – or should I say ruining — the country. Yet Trump is willingly rejecting those who would vote for him, if only not to see four more years of Joe Biden.
Trump is vindictive, petty and small despite his stature. If elected he will oversee a government that will go after his enemies – well a few of his enemies because four years won’t be enough to go after all of them. He will try to reverse Biden’s policies such as soft on Iran, embrace the climate agenda, and reverse the Education Department’s edicts on LBGTQ, especially the transgender part. However, he has promised a disastrous policy of ramping up the imposition of tariffs on everyone including our allies. He is proposing a 10 percent border tax which makes him a mercantilist. Those were the advocates who wanted to limit imports and maximize exports during the eighteenth and nineteen centuries. The great Scot Adam Smith and his intellectual descendants successfully debunked mercantilism showing that it harmed the host country by raising prices, decreasing the quality of goods, increasing unemployment and decreasing the population’s real income. Yet like the bad penny, the concept keeps refusing to die and keeps coming back. Trump is its latest manifestation. He railed about NAFTA and called it the worst trade agreement ever even though the evidence showed otherwise. The states supposedly harmed by NAFTA all accrued benefits outweighing the costs. One unmentioned benefit was that the industry that grew in northern Mexico provided good-paying jobs and stemmed illegal Mexican immigration into the country. Now the illegals mainly are fleeing Central America.
The Trump tariffs in essence imposed a tax on Americans of $80 billion by raising the cost of foreign goods. Not only did he impose tariffs on China, but he also imposed them on our allies with tariffs on steel, aluminum and timber. The affected countries retaliated by raising tariffs on American goods. One of the things that Trump forgot is that many of the imported goods were intermediate goods used in the manufacture of American final products. Raising the price of those inputs led to an increase in the price of the final goods to the American consumer. It is estimated that the tariffs on steel cost 166,000 manufacturing jobs and some companies shifted production overseas and closed US facilities. Overall as many as one million jobs may have been lost. Remember when Trump tried to justify the tariffs by invoking national security? Ironically, Trump’s 25% tariff on imported steel has been given as the reason for Nippon Steel’s acquisition of US Steel. So much for national security.
Now Trump wants to double down on his mercantilism by imposing a 10 percent border tax. So instead of just alienating our Western allies, he is seeking to alienate the rest of the world. A border tax will be met by retaliatory tariffs from all the countries affected. Trump thinks that imposing a border tariff will force manufacturers to make their goods in the US as prices of imported goods rise. He then proposes a reciprocal tax equal to what the exporting country would put on American goods. Trump and his protectionist allies need to heed history. When the last time such tariffs were imposed Herbert Hoover was president and signed the Smoot-Hawley Tariff Act of 1930 whose tariffs dramatically shrank world trade and is credited by many to have caused the Great Depression.
Although Biden has purged most things with Trump’s name on it, tariffs (along with COVID vaccines) have been an exception. He continued Trump’s tariffs on Canada and Europe which along with the provisions of the so-called “Inflation Reduction” Act are leading to a trade war. As some European companies are shifting production to the US to take advantage of the act’s wildly generous green subsidies, the Europeans are countering with their own green subsidies. The worry is that Europe will impose retaliatory tariffs and help spark another worldwide recession. If that happens, thank Trump.
