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Robert Reich: Trump’s Trade Wars – OpEd

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Trump has gotten America into a trade war with all our major trading partners. He’s put tariffs, which are essentially taxes, on what they sell to us. And they’ve retaliated by putting tariffs on what we sell to them.

Trump’s trade war is dumb and dangerous for 3 reasons:

First: American companies make and sell things all around the world, employ people all over the world, and are owned by investors all over the world. At the same time, foreign companies are here, employing Americans, and exporting from the United States. BMW, a German company, is the biggest automobile exporter from the United States.

Second: Tariffs hurt American workers.

They drive up prices of inputs used by American workers to make all sorts of things – thereby making our workers less competitive internationally. Tariffs on steel hurt American workers who use steel in making cars, appliances, and motorcycles. Tariffs on chips, wires, and circuits hurt American workers who use them for making high-tech products.

Tariffs also drive up the prices of goods bought by American consumers from all over the world, reducing the purchasing power of American wages. They’re the equivalent of a wage cut.

And tariffs push foreign governments to raise tariffs on American exports, thereby making American workers even less competitive. Europe puts a retaliatory tariff on Harley-Davidson’s motorcycle exports, and what happens? Harley moved production to Europe.  

The trade war that began in 1930 with the Smoot-Hawley tariff ended up worsening the Great Depression.

Third: The best way to increase the competitiveness of American workers has nothing to do with tariffs. It’s to invest in America.

– Invest in the skills and know-how of our workers, starting with early-childhood education, through better schools, access to world-class technical education, and access to college;

Also invest in future knowledge, through government support for basic research and development.

– Invest in the infrastructure that links American workers to their jobs, to other American workers, and to the global economy. This means world-class roads, bridges, rapid transit, container ports, access to high-speed Internet, and more.

– Invest in the health of American workers through universal health care

But Trump and Republicans have been cutting all these investments.

Trade wars may make Trump feel tough, because he loves tests of his dominance. But they hurt average working people.


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Robert Reich

Robert Reich

Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fifteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "The Common Good," which is available in bookstores now. He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.

One thought on “Robert Reich: Trump’s Trade Wars – OpEd

  • August 18, 2018 at 3:39 pm
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    “The trade war that began in 1930 with the Smoot-Hawley tariff ended up worsening the Great Depression.“

    That is fake news. International trade started to decline two full years before Smoot-Hawley tariff became effective.

    After Trump announced tariffs the volume of international trade increased as traders sought to beat the tariff. In contrast two years before Smoot-Hawley trade started to decline. Trade peaked in June 1929 and begain to decline. Clearly not caused by Smoot-Hawley tariffs which did not become law until June 1930 but did not become effective until June 1931. While the Great Depression lasted until the war started Smoot-Hawley tariffs did not last coming down after passage of the Trade Agreements Act of 1934.

    Smoot-Hawley was the only tariff increase in the USA that did not produce economic improvement. Beginning with the Tariff of 1816 and lasting until the Kennedy Round of Tariff Reductions in 1967 we were the most tariff protected country on earth. The Tariff of 1816 was our first protective tariff. It was followed by an improved economy. Tariff protection was increased in 1824 and in the Tariff of 1828 was the highest tariff we ever had. The Compromise Tariff of 1833 lowered the 1828 tariffs over a period of ten years. In 1842 Whigs, blaming the Panic of 1837 on low tariffs, increased tariffs and the economy recovered. The election of 1844 put democrats in charge and they lowered tariffs to about 20 percent with the Tariff of 1846. From the Tariff of 1861 until the Tariff of 1913 tariffs averaged more than 40 percent. During that time we became the most prosperous nation on earth. Eclipsing free trade advocate Great Britain. Grover Cleveland was elected president in 1892 just in time to get blamed for the Panic of 1893. His response was to lower tariffs with the Tariff of 1894. It did not work and the Democrats dropped Cleveland in favor of William Jennings Bryan who lost to ardent protectionist William McKinley. McKinley restored tariffs with the Tariff of 1897. Prosperity ensued. In 1913 tariffs were lowered. The same bill created income taxes. After World War I the USA went into a steep depression. Congress responded with the Fordney–McCumber Tariff of 1922 raising tariffs. The resulting economic prosperity is generally referred to as the “Roaring Twenties.” In June 1930 Congress responded to the Great Depression with the Smoot-Hawley tariff of 1930. This remains the only tariff increase in the entire history of the country that did not result in an improved economy. Smoot-Hawley did not last long with tariffs declining after the Trade Agreements Act of 1934. The Great Depression continued ending with war spending. After the war tariffs declined with trade protection ending in 1967. Within 5 years the wages paid to blue collar workers peaked in 1972-73 and have never recovered remaining below that peak to this day.

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