Unilateral Free Trade: The Case Trump Should Be Making

Trump just announced $12B in farm subsidies to offset tariff losses. If I was Trump’s advisor, I would push for us to disengage in two things: tariffs and corporate welfare. Here is my case below and what I’d like to see Trump do.

Both tariffs and bailouts work together to harm the consumer and ultimately reward a very small group with taxpayer funds as a direct result of bad policy.

Headlines are advocating the “$12B lifeline” for farmers as a win. It’s not. Let’s look at a couple of issues. It’s not free for starters, the cash comes from coercive taxes to compensate an important sector for losses caused by tariff policy itself. A simplified way to look at tariffs is to see them as a tax on imports, higher prices for consumers because of higher costs for businesses that rely on the impacted supply chains. When other countries retaliate, our farmers lose export markets and their incomes drop.

You might be pressed to say, “What if the tariffs on our exports were too high anyway? Wouldn’t farmers be screwed, and shouldn’t we retaliate?”

Bad policy abroad doesn’t justify bad policy at home. When foreign governments tax their people with tariffs, responding with our own tariffs and farm bailouts just spreads the economic damage. Americans should benefit from cheaper foreign goods while farmers shift toward markets not controlled by foreign bureaucrats.

My guidance to Trump: let’s admit tariffs are hurting us vs. looking to solve it with subsidies. We won’t get hit twice with higher prices, and we won’t get hit with additions to the deficit or inflation. This is inevitable if we go down this path and do not course correct. It’s almost a triple tax in a sense.

There is a common myth out there that we’ve been led to believe we need balanced trade, but a trade deficit is nothing to be concerned about. Trade deficits lead to investment in America in our favor, and less investment abroad as a balance, this is the ultimate sign of strength. If some other country wants to shoot themselves in the foot with bad tariff policy on US products with increased taxes on imports, let their citizens become destitute over bad policy while our farmers have a price umbrella. The extra goods need to go somewhere when secondary countries run dry, and this has happened in action before and in many cases is still happening to our advantage.

The right move isn’t retaliation, it’s a move towards unilateral free trade. Cut every US tariff to zero tomorrow. In due time, we’d have cheaper inputs, lower prices at checkout, and manufacturers scrambling to build factories here to access our market tariff-free.

Let’s cut tariffs, have our consumers paying less, our producers actually competing, and farmers selling at a global level vs. lobbying for a bailout. End subsidies for politically connected firms, and better competitors will most certainly emerge. If you want a trifecta of quality, choice, and efficiency, that’s how it’s done. Right now the government is putting out fires with gasoline. The real challenge we face is the problems we are creating from bad policy.

Let’s stop creating the crisis and let free markets do their thing.

Should Trump ditch the tariffs and subsidies, or is there something I’m not seeing?