Trump, Vance peddle fictions to sell Americans on massive tax increase
One need not rely on experts to know tariffs are typically not a good policy. Going back to Adam Smith writing “The Wealth of Nations,” we know it is better to manufacture cheap commodities in areas that can make them cheaply so that wealthier nations can spend their wealth more productively. Adding tariffs historically disrupts that balance and often causes economic slowdowns.
President Donald Trump thinks the United States needs to rebuild its manufacturing capacity. In some cases that is true. We should, for national security reasons, be making microchips, weapons, planes, ships and pharmaceuticals in the United States. But we do not need to make everything.
Former President Joe Biden wanted coal miners to learn to code and transition to newer jobs. Donald Trump does not want to transition Americans to higher technical jobs, but to instead create less technical jobs that people are not currently doing. It is a progressive approach. Instead of “learn to code” it is “make the t-shirt.”
What Trump supporters miss is that the United States outsourced its less technical manufacturing to third-world nations and now manufactures more technical goods here. In Northwest Georgia, Vice President JD Vance lamented the closure of a t-shirt manufacturing facility. He wanted it restored. What he missed is that while that plant closed, the carpet manufacturer expanded. Not only is carpet manufacturing more technical than t-shirt manufacturing, but it pays better.
Outside of limited areas related to national security, we do not need to create new manufacturing in this country. Labor and production costs are higher than abroad. It costs $70 an hour in labor costs to make a car in the United States compared to $6 in Mexico. Adding tariffs to make foreign cars more expensive does not make American-made cars less expensive. It makes it more expensive for the poor and middle class to buy a new car.
Companies have no incentive to repatriate much manufacturing because the tariffs might change. In four years, with a new president, they could go away. If it takes five years to zone, approve and construct a new plant in the United States, and then train a workforce that may or may not exist at the time, why not keep money in an interest-bearing account and see the political fallout of tariffs instead? It makes more economic sense for a lot of companies to sit on the sidelines than reinvest with so much uncertainty around the whims of a single man.
The United States would instead deregulate. Lower the costs for businesses to manufacture in the United States. Reduce the minimum wage. Reduce regulatory compliance costs. Reduce environmental costs and zoning burdens to build. Reduce and simplify the tax code. We may never get back the cheaply produced t-shirts, but other manufacturers could be incentivized to come back through lower development, regulatory, and tax costs that offset shipping and foreign development costs.
It is a myth that other countries have piled high tariffs on the United States. President Trump’s chart of those tariffs, for example claiming a 90% tariff from Vietnam, is fictional. Many of the countries accused of high tariffs have free trade agreements with the United States and have zero tariffs on our imports.
The president, using fiction to sell the largest tax increase on Americans since 1968, should rethink his plan. Cut taxes, do not raise them. Deregulate instead of expanding regulatory compliance costs related to tariffs. Be strategic with tariffs, not broad. Target China, certainly, but do not punish countries that would be our allies against China. Understand that, contrary to Vice President Vance’s claims, Americans do want cheap toasters because then they have money to spend on their children’s education, their homes, vacations and more.President Trump and his supporters have decided the burden of leading the world is too great and we are overextended. They have not contemplated the costs of not leading the world, which would be higher. And, in the meantime, the people who scream that we cannot manage the whole world have decided to start a trade war against every other nation. There is a better way.
Erick Erickson is a conservative syndicated columnist.