Customs duties, duties, duties. That's what all the media have been saying these days. I'm pleased to see President Trump's popularity hit when he taxes imports.
Nothing else draws the same attention. Are inflation and unemployment claims moving lower? Wait until the tariffs begin and chant the chorus. Oil prices fall? Is manufacturing increasing? How much money is from overseas? But those tariffs…
Given the blowback, why is Trump pushing so hard to increase the fees paid for US imports?
First of all, he thinks America is. It was treated unfairly Over time by trading partners. Secondly, he wants to offset higher tariff revenues Promised tax reduction. And the third – most importantly – because he wants it to be more attractive to the company Manufactured in the US
It would be difficult for anyone to oppose those ambitions, even Democrats. But I oppose what they do.
Let's start with a president who wants to level the trade field. The hysteria that has been lost about the “trade war” is that many countries have already fought a war with the United States, and they have won.
Take Canada, our “nice” neighbors to the north. In Ottawa Threatened to cut off natural gas supply There is little to say about the tariffs imposed on American-made cheese, for example, in New York and other states (which don't seem to be very good). 245%. By chance, US producers do not violate that level, but that According to The International Dairy Food Association told the International Dairy Food Association, “Canada has set out various protectionist measures that fly in the face of trade obligations made under the USMCA.” The accusations of fraudulent trade contracts between the USMCA, Mexico and Canada are backed up by the USMCA Dispute Panel, which found Canada in 2022.Non-compliant.“That's not good either.
Europe charges fees 10% For US automobile imports, they only charge 2.5% of European Union automobile companies. Japan is imposed Double the customs duties When we collect imports from Japan, we are talking about US goods. These are the types of uneven tariff regimes the president is fighting for. It's time for someone to do it.
Trump's second goal is to raise tariff revenue, or money from overseas, to offset the proposed tax cuts.
Today the US has gathered a few $80 billion a year Customs income. By doubling or tripling that amount, Trump Tax reduction in 2017. Customs duties cannot replace personal income tax and business income tax. $2 trillion per year. But they are part of a package designed to settle the deficit, along with government spending (courtly courtesy of the government's Department of Efficiency and Republican Congress) and higher growth reductions expected from lower taxes and deregulation.
The need to sort out our deficits has been highlighted recently when the government reported the federal budget gap for the first five months of the year. Total of $1.1 trillionan increase of $319 billion from last year. Those numbers make a laugh for former President Joe Biden claim That he had reduced his deficit.
The final reason for raising tariffs is that Trump wants to bring manufacturing back to the US. Yes, and here's why: The main reason US companies have historically shipped overseas is that labor costs were much higher at home than in China or Mexico, for example.
When I'm an American i got you During the Great Recession, when GM workers earned over $50 per hour all-in (including benefits), a decline in US manufacturing made more sense.
That's still true today. As of 2022, the average US manufacturing salary was Approximately $32,000 It cost about $14,000 in China and under $5,000 in Mexico. However, the great potential for AI to save costs by making production more efficient reduces the importance of its differentiation. Factory built today can reduce the amount of labor required to build a car or washing machine, for example, with the help of new technology.
As the number of jobs per dollar of production could decrease, it becomes even more important to seduce the US foreign investment to boost total employment. Tariffs and energy – another important Trump emphasis – is key to that effort.
As labor is decreasing, the importance of electricity costs is increasing. Pushing the cards Corrected production of fossil fuels And embracing all strategies of existence is important to our nation's outlook. The cost of industrial power in the UK and EU countries is More than twice what we pay At home, the main reason, for example, German manufacturing has been in a recession for the past two years, thanks to some of the “green” policies Biden wanted to impose on the US.
Germany's Siemenschip maker TSMCUnited Arab Emirates Energy Company AdnockAustralian oil and gas producers Santosautomakers Honda And Japanese companies Softbank It is one of the overseas companies committed to new investments in the US.
That's true for BMW and Volkswagen. It is reportedly We are also considering expanding our production here. Apple and other US companies have also announced Increase in investment With American plants.
In part, these companies respond to Trump's promise to cut taxes, increase energy production and reduce regulations. This is the agenda that promoted post-election CEO trust. To the highest level For years. In part, they respond to the threat of higher tariffs.
The media has focused on tariffs and recently, Possibility of a recessionpartly intended to undermine Trump's uplift. The president, along with Congressional Republicans, needs to advance tax cuts and deregulation efforts to restore trust.
They also need to highlight the good news: Inflation is inscribed, There are many jobs available, Gasoline prices fall and Egg prices dropand by the coincidence that the media has forgotten to mention them.
Liz Peak Wertheim and Company, a former partner of Wall Street's major brackets.
