One reason Rep. Alexandria Ocasio-Cortez, D-N.Y., and other Democrats were subjected to so much ridicule when they rolled out their $93 trillion Green New Deal is that they promised too much. By healing the environment, they claimed they could also create full employment (at least for those wanting to work) and find the money to provide universal healthcare and fix infrastructure as well.
But it’s 2019, not 1890. Americans have by now been trained to recognize a scam: The telltale sign is always that it’s too good to be true.
The Green New Deal’s supporters made a critical mistake in that they weren’t clever enough to tell at least one convincing half-truth. They would have done better to admit that their proposal involves trade-offs. The reduction of carbon emissions will cost money and hamper economic growth to some degree, and that is true even if it’s worth it on its own merits.
Unfortunately, President Trump seems to be making the same mistake this week when it comes to tariffs.
He has a worthy cause on his hands. He is seeking a trade deal with China, and judging by the Chinese regime’s whining, he is negotiating effectively. He is demanding that important provisions negotiated orally, especially those pertaining to intellectual property, be put into writing so that they are enforceable. The Chinese, loath to give up their official state policy of stealing foreign companies’ intellectual property, are being shifty. After months of negotiations, they suddenly tried to go back on promises they made at the bargaining table as soon as they were put into writing.
This is why Trump is suddenly ratcheting up tariffs: to gain leverage and force China to bargain against it. If there were ever a good moment to adopt this strategy, it is now. The greatest fear of China’s regime is an economic downturn that could result in widespread popular discontent, and it’s nearly upon them already. A trade war with the U.S., the biggest customer for their exports, is absolutely the last thing China’s leaders need.
At the same time, though, tariffs against China are really bad for U.S. consumers. Tariffs are a form of partial self-blockade — a virtual act of war against one’s own country. As we explained earlier this week, they drive up the prices that American consumers pay for both Chinese and domestic goods. They slam U.S. exports by inviting retaliatory tariffs. And like all taxes, they will only make Americans less wealthy and reduce economic growth.
That’s true of these tariffs, even if they are worth doing as a tool for making China into an honest market where U.S. companies can operate without fear of theft.
Unfortunately, Trump doesn’t seem to get that. He either believes his own falsehood (like the Green New Dealers) or he thinks he can fool people when he tweets things like this: “Tariffs will bring in FAR MORE wealth to our Country than even a phenomenal deal of the traditional kind. Also, much easier & quicker to do.”
Not one part of that tweet is accurate. Tariffs will reduce trade and economic growth without generating nearly enough revenue to make up for it. Trump has to know that no nation can tax its way to prosperity, so why say things like this?
Trump went on to propose already-tried-and-failed ideas to help U.S. farmers, the prolific exporters who are getting killed in his trade war. He spelled out on Twitter a plan for how to use the $100 billion that he claims the U.S. will collect as revenue from tariffs. “If we bought 15 Billion Dollars of Agriculture from our Farmers, far more than China buys now, we would have more than 85 Billion Dollars left over for new Infrastructure, Healthcare, or anything else,” he tweeted. “China would greatly slow down, and we would automatically speed up!”
But these tariffs won’t bring in $100 billion — the U.S. is projected to collect $74 billion in tariffs overall. Moreover, the anticipated revenue is already spoken for. If Trump wants to buy crops in order to stabilize markets (something Herbert Hoover’s administration tried without success), then current or future taxpayers are going to have to find new sources of revenue to pay for other government programs.
Trump’s top advisers should show him some tough love. Tell him the truth about how tariffs have trade-offs. If they cause consumer prices to spike, they could even cost him reelection. He deserves to know that much.
