The Trump presidency came in with a booming stock market and a surge in job creation. Republicans rightly felt optimistic about tax reform because the economy showed such strong signs of growth in response.
In recent weeks, though, the economy has become bogged down. The Dow Jones industrial average is now down for the year and job growth has slowed. There’s a strong sense that President Trump’s decision to enter a trade war with China is the chief culprit.
Things are getting worse, and the ideas being floated worse still, now that Trump’s decision to impose enormous tariffs against foreign steel and aluminum has inspired China to issue its own threats of retaliatory tariffs against American products.
There might be only one thing in the entire universe that all real economists agree on, and it is that high tariffs are stupid. As Washington Examiner columnist and European Parliament member Daniel Hannan put it, they act exactly the same as a military blockade against one’s own country, and they harm its economy in just the same way.
It’s bad enough that tariffs blockade American consumers, isolating them from the benefits of international trade and competition. But it’s worse still that the damage then rebounds against domestic businesses that sell products overseas. The reason is that other countries impose retaliatory tariffs.
Agriculture is the largest export, and China is its second-largest market, nearly tied with Canada.
Farmers already expect to suffer from Trump’s tariffs. But things will get especially ugly if the Chinese follow through by retaliating against soy, by far our largest export crop.
One would hope that Trump, recognizing this, would have thought twice about his tariff announcement. Instead, his administration is floating a plan for farmers so ludicrous that only central planners could have thought it up. The idea is to restore the role of the Commodity Credit Corporation, a Depression-era government agency that subsidizes farmers.
Through the CCC, the same taxpayers already forced to pay more for goods and services thanks to the tariffs would additionally be tapped for up to $30 billion to subsidize farmers who, until the tariffs, were perfectly capable of supporting themselves with honest work.
So Trump would with one hand cripple the nation’s farmers by starting a trade war against one of their best customers, and then with the other hand shake down their fellow citizens to make up their lost income. As big government so often does, it would expand itself to solve the very problems it created in the first place, and then repeat the process when this solution creates still more problems.
But farmers kicked in the teeth by Trump’s tariffs don’t need an additional handout. What they need is for the president to refrain from kicking them in the teeth.
The Obama administration, with its healthcare law and its food stamp expansions, took millions of able-bodied adults who were self-supporting, including millions with affordable insurance they liked and paid for themselves, and made them dependent on government subsidies to pay for their food or their insurance premiums. This is exactly the opposite of what government should always be trying to do, which is to encourage everyone capable of supporting themselves to do so, so that there is a large enough tax base to support those incapable of supporting themselves.
Taxpayers need to be getting out of the business of subsidizing agriculture, not expanding it to make up for the economic self-sabotage of trade protectionism.
