Editors at National Review Online urge Congress to act now that President Trump has paused a key component of his trade war.
Well, it turns out that enormous tax hikes are bad for the economy. After Donald Trump unilaterally imposed one of the largest peacetime tax hikes in American history — his “reciprocal” tariffs of “liberation day” — the stock market tanked and bond yields rose, reflecting investors’ reduced faith in the U.S. economy and the U.S. government, respectively. Trump has now paused part of that tax hike for 90 days, which he says was in response to the markets’ reaction.
Still in effect will be a 10 percent minimum tariff on all imports. Non-USMCA trade with Canada and Mexico will still be taxed at 25 percent (the “fentanyl” tariff). The tariff rate on Chinese goods is supposed to be around 125 percent. There are also sector-specific tariffs on industries such as pharmaceuticals and metals that are yet to be announced.
The “reciprocal” tariffs were supposed to be negotiable or nonnegotiable, depending on whom you asked. Republican members of Congress seemed to believe they were negotiable, but they have been largely cut out of the process and have made no decision to impose tariffs. Members of the administration, such as Secretary of Commerce Howard Lutnick and Trump’s trade adviser Peter Navarro, insisted that they were not. …
… A few things that would really reassure the markets and set up Republicans for future success: Rescind the “liberation day” executive order, fire Peter Navarro, don’t let Howard Lutnick back on television for the next few months, and focus all attention on solidifying the 2017 tax cuts as quickly as possible. Congress should end the president’s bogus emergency declarations and retake the tariff power that belongs to it under this little-read document called “the Constitution.” If none of that happens, we’ll see you back here again in three months.
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Author: Mitch Kokai
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