On August 13, 2019, The Trump Administration announced that some of the new tariffs scheduled for September 1st would be delayed until December 15 to lessen the impact of US holiday shopping. Earlier this month Trump announced that the remaining $300 billion in Chinese goods would be charged a 10% tax; items including athletic apparel and shoes to name a few. As it stands, the first round of Chinese tariffs has had minimal impact on everyday Americans. However, as China retaliates with their taxes and weaponizing the agricultural industry by banning the importation of all US foodstuffs, many economists have worried that the United States and China are set to engage in a volatile trade war with global repercussions.
China is the largest buyer of US agriculture, and American farmers fear that this ongoing ban on their products will have devastating results on their livelihood. While Liberal speculators, pessimists, and pundits daily attack President Trump on his global trade policies, many Americans are left perplexed on what truly a tariff is and what its function is to be. By definition, a tariff is a duty (tax) imposed by a government on imported or exported goods. In the case of the United States, President Trump is living up to his 2016 campaign promise to identify and reverse the demand of Chinese imports by the United States and to prevent the continued global monopolization by the “state-run capitalist country.”
By the implementation of these tariffs, the Trump Administration looks to level the playing field of trade between the US and China, and increase internal revenue, while continuingly increasing American manufacturing and employment. While many Americans are hearing a lot more today about tariffs, their use and method is anything but new. Tariffs are an “old playbook” economic strategy, dating back to between the 17th and 18th centuries. Since its inception, the use of governmental duties was to raise revenue, as was the case by Great Britain against the colonists before the American Revolution.
During the mid-1700s, Great Britain continually levied taxes against the colonists to raise revenue to fund their global empire and to suppress and punish colonial resistance. As we know, the British methodology failed, which led to American independence. However, up until 1913 and the ratification of the 16th Amendment to create a federal income tax, our country raised most of its revenue from tariffs
A government’s primary purpose in creating a duty is to preserve and protect a domestic industry from a global competitor while growing revenue. In 2010, China surpassed Japan as the world’s 2nd largest economy behind, you guessed it, the United States. Although many continue to criticize Trump’s Tariffs, Americans need to understand that the Chinese have a lot to lose as well; should they decide to continue their path of global commercial control.
First, Communist Party General Secretary Xi Jinping’s regime has produced no significant free-market reforms since taking power in 2013. Xi has centralized his authority and removed all competition and political enemies. China surpassed Japan as the world’s 2nd largest economy while lifting the crown as the leader in global exports. However, global economic success has not benefited the everyday Chinese worker. A slowdown in economic growth could spell danger for Xi Jinping and his government, whose legitimacy depends on its ability to maintain and increase the living standards of its workers.
So, what is in the “President’s Playbook?” The Trump Administration has touted the best economy in recent memory, with an unprecedented domestic manufacturing increase, coupled with an unrivaled unemployment rate across all sectors of demographics. Sure, tariffs can be scary – and they may just cost us a little bit more for our iPhones, Nikes or Samsung televisions. However, in a global, competitive economy, sometimes forceful action is necessary. The road to success and stability is not often paved without hardship. However, the race to prevent a Chinese globally controlled economy rests on a commander-in-chief that has sat in both boardrooms and breakrooms, and truly understands the needs of both Wall Street and Main Street.