On Feb.1, El Mandante Trump imposed tariffs on Canada, Mexico and China. His administration justified the action as a deterrent to the flow of drugs and undocumented immigrants into the U.S. In actuality, tariffs risk price increases for American consumers for imported goods. The duty is paid by the importer, who will then pass along the price increase to the consumer.
Of course, Canada, Mexico and China announced they would respond with retaliatory tariffs. These actions could set off a trade war which would damage the economies of all those countries. The Trump administration gave no sign for the ending of the tariffs other than the cessation of drugs and undocumented immigrants into the country. Trump thinks that the tariffs will make us “very rich and very strong.”
Tariffs are not constructive and economists agree they cause inflation. The Peterson Institution for International Economics said Trump’s tariffs will force Americans to pay more for just about everything. The National Association of Manufacturers said the tariffs would harm our factories and workers.
The billionaire captains of industry won’t pay for these tariffs. Consumers and small businesses will bear the costs. Trump is causing grief for working families when he promised to lower prices during his campaign.
The Smoot-Hawley Act of 1930 raised U.S. import duties in order to protect American farmers and other industries from foreign competition. It is now widely blamed for increasing the severity of the Great Depression. Soon other countries retaliated by increasing their own tariffs and both U.S. exports and imports dropped dramatically. The official U.S. Senate website refers to the Smith-Hawley Act as, “among the most catastrophic acts in congressional history.” Investors feared the act would cause stock prices to fall, prompting many to sell shares in record numbers.
Today, hedge fund managers are gambling against the U.S. economy, betting that Trump’s presidency will result in a market crash that could decimate 401(k)s and savings in America. I remember the inglorious “credit default swaps” cooked up by the hedge funds in 2008, which bundled insolvent loans and were sold short for spectacular gains in a down market. Well, sports fans, it appears that history is repeating itself again.
Don Hiddleson, Millcreek
