As he was driven to work at the White House in a limousine on Monday, Larry Kudlow couldn’t be happier with the headline in The Washington Post: “Kudlow Opposes Trump on Tariffs.”
The story began: “National Economic Council Director Lawrence Kudlow acknowledged Sunday that American consumers ultimately pay for administrative tariffs on Chinese imports, contradicting President Trump’s repeated false claims that the Chinese are footing the bill.”
Kudlow, a free trade advocate, admitted on Fox News that consumers pay tariffs on foreign-made products they buy here in the US. However, this is by no means the whole story.
A tariff can be described as a tax on sales or consumption paid by the consumer, but tariffs are also a discretionary and optional tax.
If you choose not to buy Chinese goods and instead buy comparable goods made in other countries or the US, you will not pay the tariff.
China is losing sales. That’s why Beijing, which generates $350-400 billion in annual trade surpluses at our expense, howls the loudest. If Donald Trump imposed a 25% tariff on all $500 billion of Chinese exports to the US, it would paralyze the Chinese economy. Factories seeking reliable access to the American market would flee the Middle Kingdom in panic.
Tariffs were the taxes that made America great. These were the taxes on which the first and greatest of our early statesmen relied, before the arrival of the globalists Woodrow Wilson and Roosevelt.
Tariffs to protect manufacturers and jobs were the Republican Party’s path to power and prosperity in the 19th and 20th centuries, before the rise of Rockefeller’s Eastern liberal establishment and its adoption of the British-born heresy of unfettered free trade.
The Tariff Act of 1789 was passed with the stated purpose of “encouraging and protecting manufacturers.” This was the second act passed by the first Congress under the leadership of Marshal James Madison. It was made by Alexander Hamilton and signed by President Washington.
After the War of 1812, President Madison, supported by Henry Clay and John Calhoun and former Presidents Jefferson and Adams, passed the Tariff of 1816 to price British textiles out of competition so that Americans would build up-to-date factories and capture the booming American market . It worked.
Tariffs financed Lincoln’s war. The 1890 tariff is named after Ohio congressman and future president William McKinley, who stated that a foreign manufacturer “has no right or claim to equality with ours. (…) He doesn’t pay taxes. He does not perform civil duties.”
This is economic patriotism, putting America and Americans first.
The Fordney-McCumber Tariff provided Presidents Warren Harding and Calvin Coolidge with revenue to offset Wilson’s income tax cut, ushering in the most active of the decades – the Roaring Twenties.
That the Smoot-Hawley Tariff caused the Depression of the 1930s is a New Deal myth that American school children have been indoctrinated into for decades.
The depression began with the stock market crash of 1929, nine months before Smoot-Hawley introduced the law. The real villain: The Federal Reserve, which failed to replenish one-third of the money supply destroyed by thousands of bank failures.
Milton Friedman taught us this.
A customs duty is a tax, but its purpose is not only to raise revenues, but to make a nation economically independent and to make its citizens rely on each other rather than on foreign entities.
The tariff rule is the same as that used by US colleges and universities, which charge foreign students higher tuition than their US counterparts.
What patriot would surrender his country’s economic independence to Adam Smith’s “invisible hand” in a system created by intellectuals who are faithful to ideology, not nation?
What great nation was ever built by free traders?
Free trade is the policy of weakening and failing powers that have passed their peak. Half a century after the Corn Laws were passed, the British demonstrated the folly of free trade.
They began the second half of the 19th century with an economy twice the size of the United States and ended with an economy half the size of ours and on par with Germany, which, under Bismarck, adopted the so-called American system.
Of the nations that have achieved economic dominance in recent centuries – the British before 1850, the United States from 1789 to 1914, post-war Japan, China in recent decades – how many have achieved this through free trade? Nothing. They all practiced economic nationalism.
President Trump’s problem?
Once a nation becomes addicted to the low-cost goods provided by the free drug trade, it is rarely able to break free. Loss of economic independence is followed by loss of political independence, loss of greatness and ultimately loss of national identity.
Brexit was the strangled cry of the British people who had lost their independence and were desperate to regain it.
Patrick J. Buchanan is the author of “The Wars in the Nixon White House: The Battles that Made and Broke a President and Divided America Forever.”
