Not yet three months into a second term, President Donald Trump has taken difficult, but necessary, actions to rein in the scope of a federal government on a fiscally unsustainable path. He is also working with Republicans in Congress to extend his 2017 tax cut bill, allowing Americans to keep more of their own money. These are positive steps.
But his obsession with tariffs threatens to sabotage the bulk of his agenda while hampering the American economy and putting GOP congressional majorities in danger.
On Wednesday, Mr. Trump placed 10 percent tariffs on all imported goods. The levies will be higher on certain disfavored nations. Financial markets tanked like it was 2008. The move appears to be more than just a negotiating tactic intended to get other nations to reduce barriers to U.S. products. Mr. Trump has repeatedly been defending this approach as a means of generating revenue and juicing economic activity, particularly domestic manufacturing.
In fact, it’s likely to do the opposite, crimping economic growth and making it more difficult for the administration to execute much-needed changes to business as usual in Washington.
Tariffs are tax hikes — in this case, a $6 trillion hit — that will increase prices on many goods. While concerns about globalization are understandable, trade is one of the world’s great wealth producers, lifting entire nations out of poverty. Protectionism, on the other hand, is a hallmark of economic weakness and stagnation, shielding inefficient producers from competition and forcing the costs onto consumers.
Mr. Trump also has seemingly forgotten that many American companies derive significant income from exports. Inciting a global trade war will threaten their health while potentially sacrificing thousands of jobs. Middle-class workers who embraced the president last November will probably pay the highest price.
The irony is that Republicans used to preach these realities, while Democrats favored tariffs as a means of regulating corporations and paying off their union benefactors. Now the GOP stands largely silent in the face of perhaps the largest tax hike in American history, and Democrats have discovered the perils of mercantilism.
During his first term, Mr. Trump pushed through landmark tax legislation, fought the bloated regulatory state and appointed scores of constitutionalist judges to the federal bench. The result was a prosperous economy and a judiciary with increased respect for the limited government principles upon which this nation was founded.
The president’s current efforts to cut federal waste while again passing tax relief legislation are welcome and important. Rolling the dice over a global trade war could potentially thwart any advances such policies create for the American public and the economy.
