Pat Buchanan: Why is the GOP terrified of tariffs?
Thirteen Republicans and only two Democrats served as president from 1860 to 1930, and as the party of high tariffs through those seven decades, the GOP was rewarded by becoming America's Party. Why, then, this terror of tariffs that grips the GOP?
“Please reconsider, you're making a huge mistake,” Sen. Lindsey Graham said on hearing that President Trump might impose tariffs on aluminum and steel. Twenty-four hours earlier, Graham had confidently said war with a nuclear-armed North Korea “would be worth it in terms of long-term stability and national security.” A steel tariff terrifies Graham. A new Korean war does not?
“Trade wars are not won, only lost,” warns Sen. Jeff Flake.
This is ahistorical nonsense. The U.S. relied on tariffs to convert from an agricultural economy in 1800 to Earth's mightiest manufacturing power by 1900. Does Flake think Japan rose to postwar pre-eminence through free trade? Tokyo kept U.S. products out while dumping cars, radios, TVs and motorcycles here. Both Nixon and Reagan had to devalue the dollar to counter Japan's predatory trade policies.
Since Bush I, we have run $12 trillion in trade deficits, and in this century's first decade, we lost 55,000 factories and 6,000,000 manufacturing jobs. Does Flake see no correlation among America's decline, China's rise and the $4 trillion in trade surpluses Beijing has run up at the expense of his own country?
The hysteria that greeted Trump's idea of a 25-percent tariff on steel and a 10-percent tariff on aluminum suggests that restoring this nation's economic independence is going to be a rocky road.
In 2017, the U.S. trade deficit in goods was almost $800 billion, $375 billion of that with China. If we are to turn that into an $800 billion surplus, sacrifices will have to be made. If we are not up to it, we will lose our independence, as the EU countries have lost theirs.
We need to shift taxes off goods produced here and impose taxes on imported goods. A tariff on the nearly $2.5 trillion in goods we import, rising gradually to 20 percent, would initially produce $500 billion in revenue, which could eliminate and replace all taxes on domestic production. As prices of foreign goods rise, U.S. products would replace them. There's nothing we cannot produce here. And if it can be made in America, it should be made in America.
Assume a Lexus costs $50,000 in the U.S. and a 20-percent tariff raises the price to $60,000. What would Japan's Lexus do? It could accept the loss in U.S. sales, cut prices to hold U.S. market share, or shift production to build cars here and keep its market.
The idea of a policy of economic nationalism to turn our trade deficits (which subtract from GDP) into trade surpluses (which add to GDP) is not to keep foreign goods out, but to induce foreign companies to move production here. We have a strategic asset no one else can match: the U.S. market. We should charge foreign producers to get into America's markets. Someone get hold of Graham — it's called a tariff.
Patrick J. Buchanan is the author of “Nixon's White House Wars: The Battles That Made and Broke a President and Divided America Forever.”