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Trump’s Views on Tariffs Reveal Economics is Far Too Complex for Him to Grasp

TheIntellectualist August 26, 2024
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Economics is Far Too Complex A Subject for Trump to Grasp

In the quiet, fluorescent-lit aisles of a grocery store, where the steady hum of shopping carts masks the invisible forces shaping our economy, a subtle tension brews. It’s not just the rising cost of produce or the occasional empty shelf that causes unease—it’s the looming shadow of a threat set to inflate the price of nearly everything we buy. This hidden burden comes from tariffs—an ancient economic tool that Donald Trump, in his bid for the presidency once again, promises to use not just as a panacea for economic woes, but also, according to his claims, as a path to world peace.

The Unseen Burden of Tariffs: A Hidden Tax on America

Tariffs, long championed by politicians as a means of protecting domestic industries, are often portrayed as the bastion of national interest—a defensive wall against the onslaught of cheaper, foreign-made goods. Yet, in reality, these tariffs act less like shields and more like veils, obscuring the true cost they impose on the very people they purport to protect.

Take, for instance, the 2018 tariffs on imported washing machines. Tariffs resulted in a price hike of approximately $86 per unit, a financial burden that fell squarely on American households. Contrary to the simplistic assertions of figures like Donald Trump—who, in the familiar cadence of a campaign rally, assured his followers in Wilkes-Barre, Pennsylvania, that “a tariff is a tax on a foreign country”—the truth is far more nuanced. These tariffs do not extract revenue from distant lands; rather, they exact a toll on the American consumer, manifesting as higher prices on everyday goods. It is here, in the aisles of our local supermarkets, that the real impact of tariffs is felt, quietly eroding the purchasing power of millions.

The Broader Economic Impacts: More Than Just Higher Prices

Consumer spending, the engine of the American economy, drives nearly 70% of our GDP. It is the heartbeat of the nation’s economic life, a steady pulse that sustains growth and prosperity. Yet, when tariffs inflate the cost of goods, they introduce a subtle but significant drag on this vital force. The immediate effect is a tightening of budgets, a contraction of disposable income that ripples outward, slowing demand, curtailing production, and eventually leading to job losses.

The allure of tariffs lies in their promise to protect domestic industries from foreign competition, but this protection comes at a steep price. Over time, the sheltering effect of tariffs can stifle innovation and hinder economic growth, leaving the nation less competitive in the global marketplace. The economic downturns observed during recent trade conflicts offer a stark reminder of the perils of such protectionist policies.

Globalization and the Complexities of Macro-Economic Policy

While tariffs quietly inflate the cost of living, the broader forces of globalization have similarly woven themselves into the fabric of our daily lives, reshaping economies and altering the trajectory of entire nations. Globalization, characterized by the interweaving of supply chains, the reduction of trade barriers, and the free flow of capital, has undeniably lifted living standards across the globe.

It is estimated that globalization has helped to lift nearly three-eighths of the global population out of extreme poverty. In countries like China and India—nations that together represent almost half of the world’s population—globalization has driven dramatic improvements in life expectancy and slashed poverty rates. In China, for instance, the poverty rate has plummeted from approximately 88% in 1981 to less than 1% today, largely due to economic reforms and the country’s integration into the global economy. India, too, has seen significant reductions in poverty, though at a slower pace, with the rate falling from 45% in 1993 to around 22% today. However, these global gains have not been without consequence, particularly for the United States.

Since the 1970s, large swaths of the American industrial heartland have been hollowed out, leading to widespread economic dislocation and the loss of manufacturing jobs. This upheaval has disproportionately affected the working poor and those living in precarious financial conditions—individuals who struggle to meet a $400 emergency expense and live paycheck to paycheck. Today, nearly 70% of Americans find themselves in such precarious financial circumstances.

Yet, while globalization may have been a significant driver of this economic dislocation, it is also true that without the opportunities globalization provides, living standards in these areas could be even lower. Goods manufactured in the United States typically carry higher costs than those produced overseas, particularly in countries like China, where production expenses are significantly lower. The lower prices of these imported goods, made possible by globalization, have been passed on to consumers, functioning like an implicit tax cut. In contrast, tariffs act as the equivalent of a tax increase, directly raising prices for consumers.

Supply-Side Economics and Its Consequences

Globalization has garnered support from both ends of the political spectrum, largely due to the undeniable benefits it offers to corporations and the wealthy. The ease of global trade and the free flow of capital have generated vast economic value, but this wealth has been unevenly distributed. For the United States, with its $25.5 trillion economy, the key challenge is ensuring that the advantages of globalization extend beyond the affluent few.

Tariffs, designed as protective measures, often worsen inequality within the globalized framework by driving up consumer prices and stifling innovation. While globalization has lifted millions out of poverty, it has also widened economic divides, particularly when tariffs disrupt global supply chains. These disruptions disproportionately impact lower-income households, who bear the brunt of higher costs, while wealthier individuals and corporations often find ways to shield themselves. As a result, tariffs can exacerbate existing inequalities, diminishing the broader benefits that globalization might otherwise deliver. This dynamic is further compounded by supply-side economics, which often favors the wealthy and exacerbates income inequality, reinforcing a system where the gains of globalization remain concentrated at the top.

Supply-side economics, which has dominated U.S. tax policy for decades, has effectively mandated that the poor subsidize the rich, creating a reverse Robin Hood effect. This approach has failed to deliver the promised prosperity for all, instead exacerbating income inequality and weakening the social safety net by leading to conditions that underfund the government. Universal healthcare, affordable childcare, education, vocational training, and housing—these are the necessary supports that could help mitigate the desperation and social unrest caused by economic inequality. Supply-side economics, by increasing economic inequality, exacerbates societal desperation and fuels the proliferation of social problems such as crime, mental illness, deaths of despair, substance abuse, and violence. These social ills are strongly correlated with high inequality and are notably prevalent in countries like the U.S., Brazil, and Mexico. Although the relationship is complex and multifaceted, research consistently demonstrates that high levels of economic inequality are closely linked to these social challenges.

While supply-side economics purports that tax cuts for the wealthy will eventually benefit everyone, evidence from the 1980s and 2000s suggests otherwise. These policies have often led to increased income inequality and reduced public investment in essential services. To move beyond the simplistic and harmful economic policies of the past, we must advocate for a more nuanced approach—one that embraces the benefits of globalization while ensuring that its gains are shared equitably among all Americans.

Why Listening to Donald Trump is Almost Always a Mistake

Donald Trump’s views on tariffs are as valid as his views on climate change, vaccines, January 6th, COVID-19, Hillary Clinton, and Vladimir Putin—in other words, they’re worth nothing because they aren’t grounded in reality. Trump thrives on demagoguery, fear, and misinformation, using these tools to manipulate and rally his base. His rhetoric is designed to serve his own interests, not the truth, and certainly not the well-being of the American public.

When Trump speaks, it’s important to recognize that his words are crafted not to inform, but to incite—to fuel the division and confusion that have become hallmarks of his political strategy. He preys on vulnerabilities, weaving narratives that distort facts and obscure the truth. Whether it’s his misguided stance on tariffs or his broader economic policies, Trump’s approach consistently prioritizes his personal gain over the public good.

Works Cited

Categories: Business, Demagoguery, Democracy, Economy, Elections, Extremism, Fascism, Finance, Law, National Security, News, Politics, Propaganda, Stock Market
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