Tariffs mean fewer industrial jobs, not more.

Trump has promised to make life better for middle class Americans by imposing stiff tariffs on countries like China.  And in fact he has already assigned tariffs to billions of dollars worth of Chinese imports.  However, Trump is wrong.  Tariffs will not make America Great Again.  Teriffs will make America less prosperous for almost everyone.

Why does this matter to environmentalists?  It matters because Trump is one of the major blockages to fixing climate warming and environmental devastation.  And he tells lies about how he is improving the lives of his working class base.  And if his working class base believe that he is making their lives better by imposing tariffs on the rest of the world they will continue to vote for him.  And if they continue to keep him and his cronies in offices, fixing the real problems of the world become harder and harder.

In January of 2017 Paul Krugman wrote an editorial for the New York Times pointing out that imposing tariffs on China or on any other countries, won’t result in a better life for  the working class.  In actuality, it will probably make life worse for many people who rely on factory jobs.  This worries me, because working class folks mostly voted for Trump and Trump is the guy who thinks global warming is a myth.  And this I’m afraid means very bad news for many Americans if not the end of life as we know it now.

Unfortunately, since politics gave us Mr. Trump, it means that if you think global warming should be fixed,  you  really have to be involved in politics and you really have to oppose Mr. Trump. We need to know that our president doesn’t know what he is doing when it comes to tariffs.  Hence this article.

Krugman’s article points out why tariffs won’t make life better.

He begins by asking why Trump thinks raising tariffs is a good idea:

“Why does Trump want this? Because he sees international trade the way he sees everything else: as a struggle for dominance, in which you only win at somebody else’s expense.

His Inaugural Address made that perfectly clear: “For many decades we’ve enriched foreign industry at the expense of American industry.” And he sees punitive tariffs as a way to stop foreigners from selling us stuff, and thereby revive the “rusted-out factories scattered like tombstones across the landscape.”

Unfortunately, as just about any economist could tell him — but probably not within his three-minute attention span — it doesn’t work that way. Even if tariffs lead to a partial reversal of the long decline in manufacturing employment, they won’t add jobs on net, just shift employment around. And they probably won’t even do that: Taken together, the new regime’s policies will probably lead to a faster, not slower, decline in American manufacturing.

How do we know this? We can look at the underlying economic logic, and we can also look at what happened during the Reagan years, which in some ways represent a dress rehearsal for what’s coming.

Now, I’m talking about the reality of Reagan, not the Republicans’ legend, which assigns all blame for the early-1980s recession to Jimmy Carter and all credit for the subsequent recovery to the sainted Ronald. In fact, that whole cycle had almost nothing to do with Reagan policies.

What Reagan did do, however, was blow up the budget deficit with military spending and tax cuts. This drove up interest rates, which drew in foreign capital. The inflow of capital, in turn, led to a stronger dollar, which made U.S. manufacturing uncompetitive. The trade deficit soared — and the long-term decline in the share of manufacturing in overall employment accelerated sharply.

Notably, it was under Reagan that talk of “deindustrialization” and the use of the term “Rust Belt” first became widespread.

It’s also worth pointing out that the Reagan-era manufacturing decline took place despite a significant amount of protectionism, especially a quota on Japanese car exports to America that ended up costing consumers more than $30 billion in today’s prices.

Will we repeat this story? The Trump regime will clearly blow up the deficit, mainly through tax cuts for the rich. (Funny, isn’t it, how all the deficit scolds have gone quiet?) True, this may not boost spending very much, since the rich will save much of their windfall while the poor and the middle class will face harsh benefits cuts. Still, interest rates have already risen in anticipation of the borrowing surge, and so has the dollar. So we do seem to be following the Reagan playbook for shrinking manufacturing.”

And so imposing tariffs on China will not bring more factory jobs and better salaries to the working class.  It will unfortunately result in fewer good paying factory jobs and a worse life for everyone.

The image at the top of this page is Mesa Arch in Canyonlands, UT

 

 

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