Donald Trump’s second iteration as president got into full sway with his April 2 implementation of trade tariffs, meant to protect domestic businesses from foreign competition. Special attention was paid to the People’s Republic of China, the world’s second largest economy, and a special threat to America’s financial health, at least in the view of the present administration.
“Customs duties on merchandise imports are called tariffs. Tariffs give a price advantage to locally-produced goods over similar goods which are imported, and they raise revenues for governments.” -From the World Trade Organization (WTO) website.
On Feb. 1 Trump hit China with a 10 percent tariff in response to what he claimed was Chinese negligence in stemming the flow of fentanyl into the U.S. set By April 2 with the announcement of his “Liberation Day” maneuver to boost the economy, he raised the tariff to 34 percent. Days later this financial salvo was met by China imposing a reciprocal 34 percent tariff on US imports entering that country. In due course, Trump responded with an increase of 104 percent unless China rescinded the 34 percent tariff, leading to speculation that a protracted trade war is on the horizon.
Tariffs have been around since the Roman Empire, where they were used to derive revenue from the territories that came under that government’s sway during the course of its expansion. Traditionally, they are imposed on imports that cannot be sourced in the host country, such as silk and precious gems in the case of Rome’s economy.
In this country, the 31st President Hebert Hoover signed what became known as the Smoot–Hawley Tariff Act to shield America’s industry from the rivalry of goods imported from abroad at the beginning of the Great Depression, circa 1929.
Nearly a century later, its impact was accessed by a millennium government official, a Republican and a former secretary of transportation during Trump’s first administration.
“Smoot and Hawley ginned up The Tariff Act of 1930 to get America back to work after the Stock Market Crash of ‘29,” recalls Elaine Chao, Fortune 500 company director and wife of U.S. senator Mitch McConnell (R-KY).
“Instead, it destroyed trade so effectively that by 1932, American exports to Europe were just a third of what they had been in 1929,” she went on.
“World trade fell two-thirds as other nations retaliated. Jobs evaporated.”
The merits of tariffs remain debatable and nebulous. This may be part of a long term ploy to diminish China’s quest for global expansion, which includes Trump’s efforts to “take back” the strategically important Panama Canal as part of his “America First” foreign policy. Just after the inauguration Panama began to cut its ties to China, possibly due to pressure from Trump through his U.S. Secretary of State Marco Rubio who met with the Panamanian President on February 2.
