About once a decade, the question of Protective Tariffs finds its way into the national debate. Whether a political candidate dares to raise the issue or a clever collection of activists and analysts work together to inject it into the national discussion, the reaction is always the same from the halls of entrenched power – hysteria and panic over the mere discussion of tariffs.
Both the establishment Right and the establishment Left in the United States argue that tariffs represent an end to industry and trade, that they deny opportunity to the third world, will only raise prices for American consumers, and that they are the first shot in a tragic trade war. In the halls of corporations and academia, everyone seems to agree – tariffs are bad for the economy and the country as a whole. Predictably, corporate property in Congress parrot the same line and it appears that opposing tariffs is one of the few areas where Democrats and Republicans can agree.
Thus, when anti-tariff politicians, CEOs, and academics speak, their warnings that tariffs represent an end to their globalist vision where international corporations continue to abandon Western workers with their pesky wages, rights, and protections while exploiting third world workers for lower wages, easy replacement, and lack of concern for basic human needs are thinly veiled. This latter, more honest, concern is, in fact, correct. tariffs do threaten globalism and corporate exploitation of workers and societies.
Particularly older working class citizens remember the days of American Tariffs and the undeniably better economic distribution of wealth and opportunity they afforded. Younger (middle aged) Americans remember at least the removal of those Tariffs and the “giant sucking sound” of American jobs leaving for Mexico, South and Central America, Asia, and China that decimated their communities and the American economy before their eyes.
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What Are Tariffs?
Simply put, tariffs are a tax on goods or services imported from other countries. Tariffs serve to protect domestic production by making it more expensive or prohibitively expensive for foreign corporations to export or dump products into the domestic market. They also make it too expensive for domestic corporations to offshore production and import cheaper, foreign made goods into the domestic market.
The tariffs are paid by the company or entity importing the product. Thus, tariffs increase the price of goods and foreign services that are imported into the country, which protects domestic producers and American jobs.
Tariffs can be used for more than protecting existing industry. For instance, tariffs may also help infant industries (a term used by Alexander Hamilton) grow and develop until they are able to safely compete with foreign industry producing the same product.
The American Economic Golden Age
In the 1950’s and early 1960’s, even extending to 1971, the United States had produced the greatest and most equitable economy the world has ever seen. Regardless of its past or future, this accomplishment alone is something Americans should be immensely proud of. Indeed, this fact alone will cause the United States to live forever in the annals of history. For the first time, there existed an economic system in which there were more middle class individuals than poor and rich combined.[1]
During this period, upward mobility was greater for every American regardless of age or race. The high levels of (high wage) employment resulted in increased demand and individuals inclined to start their own businesses were able to do so, all without governmental and bureaucratic boundaries that have currently helped hamstring America’s culture of entrepreneurship. This resulted in immense innovation, new inventions and developments, high levels of high wage employment, and an extremely high rate of private/individually-owned businesses. In addition, Federal, State, and Local governments invested heavily in infrastructure – from electrical grids and water treatment plants to roads, bridges, and general improvements and upkeep. Large scale high wage employment saw increased home ownership across the board, both young and old.[2]
The Golden Age of the American economy was a stout answer to the questions raised by the opposing systems of its day and recent past. It still stands as a shining example of what Americans can re-obtain provided the same policies are pursued and the political will exists to pursue them.
Other Successful Tariffs
The Golden Age of the American economy is the best instance of the successful implementation and use of tariffs (and other economic policies) in American and, indeed, world history. However, there are many other successful examples of proper usage.
The tariffs in existence during the Benjamin Harrison administration serve as a striking piece of evidence in favor of their use. While Harrison is demonized by corporate think tanks and Free Trade academics (even blamed for the Panic of 1893), the fact is that, under the Tariffs in existence during his administration, the American economy was expanding and the revenue collected by the Tariffs was such that the Federal government was actually running a surplus. These Tariffs were originally imposed after the end of the Civil War to protect American industry and promote a recovery. Just two decades after the entire country was ravaged and destroyed by a civil war, the country was rebuilding, expanding, and running a surplus.[3]
Also demonized by the corporate media, international corporations, and Free Traders were the Donald Trump Tariffs implemented during his first term as President. Although imposed on a much smaller scale than Harrison’s or those of the Golden Age, the Trump Tariffs were a starting point toward an apparent policy of protective tariffs doubling as a negotiating tool.
Nevertheless, the effects of the Tariff were felt amongst the working class of the United States who, for the first time since a brief dead cat bounce in the eighties, saw the future of working people beginning to improve instead of consistently getting worse. Those economic gains, of course, were quickly wiped away with the worldwide COVID hoax and the resulting lockdowns and governmental wars waged on their own economies. Still, the tariffs were so effective and popular, the Biden administration, publicly opposed to anything Trump-related, maintained them in order to avoid public backlash over removing them and the inevitable economic downturn that would follow if they were removed.
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The History Of Anti-Tariff Globalism
As previously mentioned, the crusade against tariffs has been led by a coalition of strange bedfellows. The most obvious is a collection corporate and banking interests, desiring to exploit the working class for cheap labor and for acquisition of cheaper raw materials combined with lower environmental standards in “third world” countries.
These interests tout the benefit of allegedly “lower prices” on consumer goods but, in reality, they are merely producing higher profits for themselves at the expense of the American worker and American society. American workers are thus caught in a cycle of lower wages and thus a need for even cheaper goods.
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Marxists, Libertarians, and Anarchists all argue for the elimination of Tariffs and the promotion of Free Trade, many simply misguided but many understanding full well how the working class is exploited and reduced to peasantry as a result of Free Trade. Libertarian ideology often transcends national interests as do those of anarchists of all stripes. Marx, for his part, supported Free Trade not because he believed protectionism doesn’t work. In fact, it was quite the opposite. Marx knew Protectionism worked but supported Free Trade because it would worsen conditions for the working class and thus hasten the worker’s revolution he predicted and desired.[4]
What Is “Free Trade?”
At this point the phrase “Free Trade” must be defined correctly and clearly so as to avoid misunderstandings. The fact that Tariffs have historically been widely popular among the working class presented a unique obstacle to those interests opposed to protective action. Dismantling measures designed to protect American industry (and doing so effectively) is a hard item to sell.
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The majority of the country overwhelming opposed the implementation of NAFTA, well aware of what removing Tariffs between Canada, the United States, and Mexico would do to the American economy. Yet, NAFTA was approved and signed anyway. During the debate, however, NAFTA proponents began used the term “Free Trade” to describe their plans to eviscerate the American economy. Free Trade was deliberately confusing since it sounds like Free Enterprise, a hallmark of the American philosophy. The use of the term Free Trade did not persuade Americans at the time but the agreement was signed nevertheless. However, incessant use of the term by Free Trade proponents, politicians, media, and academics in the aftermath have, by now, successfully confused Americans so that few are now willing to state that they are opposed to Free Trade. Indeed, multiple generations have grown into adulthood believing that tariffs are evil and Free Trade is the only method of trade available. They have been brought and brainwashed to believe that competing with slave labor in a race to the bottom is the only way to survive.
There should be no doubt, Free Trade is not within the American economic tradition. While increased competition in the American market generally leads to lower prices, increased services, higher wages, and higher living standards, Free Trade achieves the reverse. Free Trade is a race to the bottom, eliminating high wage jobs and domestic production in favor of low wage foreign labor.
Free Trade is the exploitation of the working class and, often, child and slave labor. It is also of grave danger to national security. Allowing foreign countries to produce and control the supply of vital goods, technologies, and components that a country needs to thrive and even defend itself weakens the ability to provide for the common defense and places the country in a precarious position, not to mention a population of impoverished, stressed, and struggling workers.
The creation of the term “Free Trade” to refer to the removal of tariffs and protections, flooding and dumping of foreign products into the American market, and globalist economic policies of de-industrialization is perhaps the greatest public relations victory in recent history, malevolent as it may be. Make no mistake, however, Free Trade does not represent freedom, it represents poverty.
This is because “Free Trade” represents the systematic removal of tariffs and “barriers” to trade, thus allowing foreign nations to import cheaper goods made by workers paid much lower wages, often under unsafe and inhumane conditions and few environmental restrictions. The result is the undercutting of American industry, widespread loss of jobs, and the hollowing out of the domestic economy.[5]
The Giant Sucking Sound
Predictability, as soon as the efforts to dismantle protectionism began to take hold in the United States, industry started to disappear. Unemployment rose and living standards began to decline. Factories began to close in rapid numbers and the industries surrounding those factories closed as well. Likewise, American infrastructure suffered immensely. Since the end of the Golden Age of the American Economy, the United States has been on the steady decline, with the 1990’s representing a nosedive after the signing of NAFTA. Independent Presidential candidate Ross Perot warned that, if NAFTA were signed, it would create a “giant sucking sound” of American jobs rushing to Mexico.[6]
He was proven correct immediately as American industry began disappearing left and right, a trend accelerated through various Free Trade deals signed between the United States and the rest of the world, particularly China. It is precisely the reason China and Southeast Asia function as the factory for the world today. These were jobs that were previously held by American workers who were paid relatively high wages. Those workers were transitioned from high-skill, high-wage jobs to act as competition for other workers in similar industries (lowering wages) or to retail and service jobs. Worse, the workers were simply forced into unemployment.
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Author: stuartbramhall
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