On Wednesday, President Donald Trump announced the “American Dream” would be restored with his bold plan to tax American businesses and consumers for importing goods from abroad.
“Now it’s our turn to prosper, and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt,” he said. “And it will all happen very quickly. With today’s action, we are finally going to be able to make America great again, greater than ever before or. Jobs and factories will come roaring back into our country and you see it happening already. We will supercharge our domestic industrial base.”
Depending on which supporter of the president you’re talking to, this is actually what he believes will happen with sweeping tariffs in place or this is instead part of some big “negotiation” with vaguely defined objectives.
We didn’t think we needed to remind Republicans of this, but to put it simply, tax increases are generally bad. If a key plank of your economic policy is to raise taxes to get prosperity, you’re doing things wrong.
Sen. Rand Paul of Kentucky is seemingly one of the few in his party who still remembers this. “On many fronts, I’m a supporter of the president,” he told The Hill. “On tariffs, I think it’s economically a fallacy to think it will help the country. Tariffs are a tax.”
We know what happened the last time Trump imposed tariffs in his first term. Sure, some new domestic jobs were created in sectors subject to tariffs, but even more were lost as a result of businesses and consumers having to pay more for the same things.
The latest line of argument from Trump is that he’s doing this to deter other countries from imposing taxes on their own people.
But as former Rep. Justin Amash of Michigan noted on X, “Just because other countries impose high taxes on their people does not mean the United States should impose high taxes on Americans. The United States is the economic powerhouse of the world in large part because our economy is relatively free. Don’t emulate socialist countries.”
Yet that’s exactly what Trump is doing in pursuit of his confused goal of doing whatever he thinks he’s doing in support of American manufacturing.
As economist Veronique De Rugy wrote in a column recently published in this newspaper, “America’s industrial base is not collapsing. It’s evolving — becoming more productive, more specialized and more capital-intensive. Protectionism won’t bring back the past or revive old jobs. It will just make the future more expensive and shift workers into lower-paying jobs.”
Unfortunately, one can find no recognition of this in Trump’s rhetoric or actions. And even worse, Trump is leading Republicans down a path of making confused and contradictory arguments in support of higher taxes and central planning of the economy.
Meanwhile, Congress is standing by, unwilling to buck the president and denigrating our system of checks and balances.
America’s trade policy, simply put, should be free trade.
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