Tag: protectionist

The US Can Help BMW Grow But Trump Is Hurting the Process

By Owen Heimsoth | United States

Recently, tariffs have become pretty big in the news. Just yesterday, BMW announced measures to add production in China, likely a response to President Donald Trump’s tariffs on automobile products from the EU.

Donald Trump’s actions clearly oppose the values of free trade. Because of this, he is hurting our ability to grow cars in Iowa.

Yeah, that sounds weird, but let me use a popular argument relating to free trade that many economists use.

How to Grow a BMW

There are two ways in which we can produce cars. We can either manufacture them in Detroit or grow them in the Midwest.

The first plan of action is a well-known, huge part of our economy, but so is growing the automobiles. I’ll explain how the process works.

In late April, our farmers start planting their soybeans and watch them begin to grow. A few months later they begin to harvest their crops and put them on ships. Those ships float over the horizon to the east. We trade our soybeans with many countries throughout the world, and a couple months later, the ships come back with BMW’s on them.

This is how free trade works. It does not take an expert to see this; I reckon an eight-year-old may understand the benefits. We have soybeans. We want cars. The rest is history.

This would be simple, but Trump is doing his best to make it much, much harder.

In recent months, Trump has put tariffs on automobile imports from the EU. As a result, China has placed retaliatory tariffs on US soybeans. What has been the result?

The US can’t export their soybeans cheap to China, a huge manufacturer of automobiles. Also, EU tariffs have hurt automobile trades with the contingency.

Now, German automobile companies such as BMW are putting their factories in China and helping raise the price for automobile consumers in the US. This is also counterintuitive because we are failing to curb Chinese influence in the global market, something that Donald Trump aimed to do.

And now we can’t grow BMW’s in the Midwest.

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Trump Ends His Glory Streak

By Mason Mohon | USA

It was bound to happen sooner or later.

The Donald had been looking up for me, to be honest. As a radical libertarian, I am always hesitant to put my support behind any president, but the man almost swayed me. Almost.

During the election cycle, I was hard-set against Mr. Trump mostly for his protectionist trade outlook. It was a call-back to the Republicans of old: promote business in the U.S. by removing regulations (yay) but also increasing tariffs (boo!).

On inauguration day, I walked away from the Washington Mall fuming with disappointment and anger that I just saw the new president give a speech focused on promoting the American worker and “bringing jobs back” to the United States. Protectionist rhetoric of this sort always tends to set off the alarms in my Hazlitt-filled mind, so it was understandable that I felt this way.

To my surprise, though, he didn’t seem to carry out very publicly any of these grand promises. On the other hand, his first week was filled with executive orders, some nasty and authoritarian, but some glorious, particularly his order that every new regulation put in place would need to repeal two existing ones. While this doesn’t make much sense as an actual policy action (regulation was barely defined), it did set a precedent for what the Trump presidency was going to look like.

At that point, though, I was still extremely hesitant.

Then nearly a year later the tax cuts came around. The Republicans had seemingly proven themselves to be incompetent when it came to repealing Obamacare, but they cut taxes with flying colors. That is, flying colors as compared to their regular uselessness.

I thought to myself: “Man, that is pretty awesome. Taxes are hella theft, so thank god these are going down.” I began to budge. Trump had taken a pretty positive stance in my view, but this all changed very quickly.

I looked at my phone yesterday only to see a news notification that Trump is putting a 30% tariff on solar cells and washing machines.

Well heck.

Obviously, his intention is to save jobs in the U.S., particularly those in manufacturing. This fallacious reasoning has been debunked many times over – these jobs are outsourced to foreign nations because it is cheaper to make them there. If they are cheaper to make there, they will be cheaper to buy here, meaning that real wages will go up. If they are built here, they are more expensive because of wage and labor laws, in addition to an evolving workforce. Real wages are driven down, and U.S. citizens have less wealth to spend on other things that will boost the economy.

To add insult to injury, this isn’t even going to work. The Guardian reported that this tariff will cost the United States jobs, not give it more. Our real wages are going down, we have fewer jobs, less wealth is able to be used, and we lose out on a valuable source of energy.

Whoop dee doo.

Donald Trump is an immensely successful businessman and a charismatic speaker, two things I admire a lot. He is not an intellectual nor an economist, though, which is showing through in his actions.

There are still three years left, though, which means that there is time to make up for this blunder. Whether or not that will happen is not something that I know.

Trump’s Economic Plan: The Greatest or Statist?

By Austin Anderholt | USA

If you’ve been following Net Neutrality recently, you might have the idea that the Trump administration will stop at nothing to deregulate America’s economy, even if it means repealing regulations that are extremely unpopular among the American people. (What’s happening? You can see the whole story here). Millions of phone calls, emails, social media posts, and internet comments have been made in strong opposition of the repeal of this specific regulation, but the Trump administration doesn’t seem to bat an eye. Is Trump’s determination for deregulation great for libertarians? Is it terrible? Is there more to the story?

As we all know, Donald Trump is a capitalistic businessman who ran on the premise that we should “Make America Great Again!” From this, we can take it as no surprise that Trump is against strong economic regulation in the United States, but is very protectionist in his fiscal ideology.  

You’ve heard leftists talk about how Trump is “cutting taxes for the rich and the big corporations!”, and they wouldn’t be completely wrong. He plans to slash corporate tax into a fraction of its original size, slim the top tax bracket by about 4-10%, and abolish certain taxes altogether, many of which are only usually placed on the wealthy. Despite what’s on paper, he often brings very populist messages: 

“Our framework includes our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected.”

-Donald J. Trump

The president has changed his mind on his tax policy so many times that it’s really up in the air if taxes for the average American will increase or decrease at all.  

Deregulation and potential tax drops are about all of the good news a Libertarian can get out of America’s future economy: 

As far as free trade, the Trump administration seems to be going boldly where no protectionist has gone before. The president has routinely used the phrase “America First” to describe his foreign and economic policy. He’s promised massive tariffs on imports, Chinese and otherwise. Some sources are predicting as many as 60,000 jobs lost as an indirect result of this harsh potential legislation. America may adapt with a strong sovereign economy, but considering the huge American demand for foreign resources, and the efficiency incentive that there is for companies to operate abroad, we won’t be seeing Trump’s chauvinistic fantasy to manifest anytime soon. Expect to be paying higher prices for your “MADE IN CHINA” American flag pins. If you’ve ever picked up an economics book, you’ll find that tariffs haven’t worked so well, but again, we’re seeing an economic agenda based on doubling down, with logic, public opinion, and second thoughts taking a backseat. 

In conclusion, President Trump’s economic policy will probably be an improvement from the last administration, but that’s hardly a compliment. We cannot confuse these chauvinistic deregulations and tariffs with libertarianism. I predict that his tariffs will fail, only raising demand for foreign goods, but his loosening of regulations is definitely a step in the right direction. It’s not exactly a libertarian utopia, but “Trumpenomics” may not end up as statist as we’ve imagined.