I often wonder, as an economic conservative, if Donald Trump can even understand the words coming out of his mouth. Trump has been known for saying things without thinking. In fact it has become a key strategy in his presidential campaign. During last week’s GOP debate, Trump defended his plan for a 35 percent tariff on imported goods, proving that he is never lacking in ignorant ideas.
“If [they’re] going to put [goods] across our border with no tax, I’m going to tell them right now, we’re going to tax you” he said. “So stay where you are or build in the United States.”
You don’t often hear conservatives gloat over their plans to raise taxes. However, Trump, a proclaimed conservative, spent a whole lot of time talking about taxing businesses that leave the country. Maybe he should’ve been asking himself why businesses are leaving in the first place. His tariff proposal is a perfect example of why good businessmen don’t always make good economists.
Businesses are always attracted to environments which are suitable for maximizing profits. If companies are producing goods in other countries, it is because the cost of producing is lower in those countries than it is here. Our country obviously makes no effort to incentivize production. If it did, businesses would be here and not in Mexico or China, among others.
The economically conservative answer to this problem would be to make our market more profitable for businesses. This would require us to decrease our corporate tax rate, which is the highest in the world, and decrease regulations. Yet Trump, in his (far from) infinite wisdom, has decided that a problem which started as the result of too much government can be solved by making the market even more inhospitable.
To see the negative impact tariffs can have, one need only look at the effects that the Smoot-Hawley Tariff, an admittedly Republican sponsored act, had on the economy back in 1930. After just a few months, unemployment nearly doubled, and over the following five years international trade decreased by 66 percent. Though the tariff was higher than Trump’s proposal, economists agree that tariffs are altogether counterproductive at ensuring economic growth.
The very prospect of tariffs, which is both misguided in intention and tragic in consequence, is, in my opinion, legalized robbery. By increasing taxes on the cheaper imported goods, government forces consumers to pay for the higher priced American made goods. Tariffs exploit low wage earners and rob them of valuable income.
If at the heart of conservatism lies libertarianism – a vision of freer markets and smaller governments – then the problem with Trump is not that he is too conservative, but that he is not conservative enough.
Tyler Grudi is a contributing writer to the Bona Venture. His email is gruditj15@bonaventure.edu
