By Ron Paul
President Trump was elected in part because he promised to reduce prices and not drag the country into foreign wars. Sadly, President Trump has adopted a tariff policy that will raise prices and abandoned his “America First” foreign policy in favour of a return to Bush-era neoconservatism.
Despite criticizing president Biden for bombing Yemen, president Trump has authorized bombing that country under the false pretense that Yemen’s Houthis are threatening international shipping. President Trump has also threatened to bomb Iran. A false justification for this threat is that Iran is controlling the Houthis. If President Trump follows through on this threat against Iran, it could lead to another “forever war.” He has also continued US support for Israel and Ukraine’s wars.
President Trump started a trade war by imposing a ten percent universal tariff on imported products and other tariff expansions. Chinese imports will face a tariff of 54 percent, while goods imported from the European Union will “only” be assessed a 20 percent tariff.
The day following president Trump’s tariffs announcement, US stocks lost 3.1 trillion dollars in value, while the dollar fell to its weakest level since October.
China responded to the tariffs by imposing a 34 percent tariff on US imports along with other measures increasing the costs of US products in China. Canada imposed a 25 percent tariff on cars imported from the US. France president Emmanuel Macron called on European businesses to refrain from investing in American businesses, saying it makes little sense to invest in America when the US is punishing Europe.
President Trump’s actions are setting off a global trade war that means US consumers will suffer from increased prices for many products both foreign and domestic. Manufacturing and other American businesses that rely on imported raw materials and other inputs from abroad will have to pay more for these inputs, assuming they are able to get them at all. US exporters will suffer from decreased demand for US products in overseas markets.
According to estimates by the budget lab at Yale University, president Trump’s tariffs will cost the average American household a 3,800 dollars loss of purchasing power. The Tax Foundation estimates the tariffs will reduce US GDP by at least 0.7 percent and decrease the average American’s after-tax income by about two percent. Middle- and lower-income Americans will obviously be hardest hit. The decrease in income, combined with the increase in prices and increase in the unemployment rate, will raise demand for government welfare programs and thus put pressure on Congress to reject attempts to cut spending.
Thus far, Trump’s response to the economic chaos he has unleashed is to say everything will work out as other countries will negotiate “beautiful” trade deals with the US. President Trump, on the same day he announced the new tariffs, called on the Federal Reserve to cut interest rates, saying it was a “perfect time” to do so. The interest rate cut, though, would only further degrade the dollar and further burden Americans with increasing prices.
President Trump called the day he announced his tariff plan “Liberation Day.” This may be the most misleading name since the Affordable Care Act. Renaissance Macro Research head of US economic research Neil Dutta more appropriately labelled it “Obliteration Day.” President Trump’s tariffs, along with his support for war, could obliterate what is left of America’s peace and prosperity.
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