It is a National Security Issue Too
Throughout his campaign and after winning, Donald Trump made it clear that he intended to begin tariffing countries across the globe who trade with the United States. With the American First policy, Trump wants to restore a level playing field for American industry and its workers. He telegraphed his fondness for the principle by calling tariff the most beautiful word in the dictionary.
Trump often referred to the McKinley Tariff Act of 1890, when the U.S. raised the duty on imported products to 50%. Behind McKinley’s tariff policy was his intention to boost domestic manufacturing, which began to lag. Similarly, Trump has the same motivation by reminding the country of two salient facts. Many countries have charged much higher tariffs than the U.S. has imposed on their goods, and the country has lost over 80,000 manufacturing plants since 1997. The loss of manufacturing potential was outsourced to other countries like China and Vietnam, where cheap goods flooded our markets and resulted in the loss of many good jobs for American workers.
On Liberation Day, Trump rolled out his plan to charge nations only a fraction of what they were charging the U.S. That fact didn’t matter because Wall Street didn’t take the policy well; fear crept into the market with a predictable downturn. In response, Trump coined a new word called panicans. It means those who are panicking because of the tariffs, including the political party opposing him and many financial gurus.
With the fear of money lost, many investors pulled their money from the market, and the Dow Jones Industrial Average dropped precipitately. The losses yesterday had the panicans freaking out most of the day. Then, the White House reported that fifty countries reached out for talks about the tariffs. The Trump Administration then put a ninety-day pause on tariffs for some countries. Immediately, the market soared over 3000 points, with the Standard and Poor’s having its best day since 2008.
The economic strategy to increase manufacturing and add jobs is essential for the country’s well-being, but it is not the only reason tariffs must be implemented. Behind the policy is the need for the country to be self-sufficient in providing critical goods necessary for national security.
One of the things the pandemic revealed was a good portion of the generic drugs many Americans rely on are produced in either China or India. Being dependent on these two countries poses a tremendous national security risk. Without the capability of medicating its populace, a country becomes vulnerable to the dictates of the producing countries.
Heaven forbid the United States engages in another war, but if an aggressor attacks her again, would we have the infrastructure to defend against the attack? The U.S. found out the hard way during World War II when Japan attacked Pearl Harbor. The lack of manufacturing stymied the U.S. response, making citizens ration everyday items. If the country had had a sufficient economy during that time, one could only wonder if the war would have ended earlier and many lives would have been saved.
Trump’s tariff position is first and foremost directed at buoying up the economy by creating an environment where American companies can compete in the global economy. By leveling the playing field, investments will pour into manufacturing because money will be made. Pharmaceuticals can again be manufactured in the U.S., forcing China and India to compete on a level playing field without a monopoly on those drugs. Breaking the dependence on other countries to produce medicines and other vital goods can only mean a more secure America.
By making manufacturing profitable again, Trump indirectly strengthens the country’s security by opening up opportunities for money-making. When money is to be made, investors will rush to get their share. It will take some time for the economic machine, including manufacturing, to gear up again, and there may be some bumps along the road. Investors and IRA holders need to look long-term and not be dissuaded by the market’s fluctuation. The trend is already happening; oil prices have already dropped ten dollars per barrel, and our energy industry isn’t even close to maximum output. Energy is always the predictor of economic health.
With more jobs, money flowing into the country’s economy, and heightened national security, what isn’t there to like about tariffs? Unless you are one of the panicans.