Reveal the truth about the U.S. economy! Can Trump’s high tariffs save the United States?

In Trump’s view, what Harris is doing is the same thing that previous presidents have done, which is nothing more than stimulating the economy, engaging in finance, etc. However, although it will cost him a lot of money, his goal is still to revitalize the American industry and manufacturing and bring factories back to the United States.

Tariff policies and barriers are designed to protect American manufacturing and factories, allowing them to survive by taking advantage of the domestic market. Otherwise, American factories will find it difficult to compete with goods and commodities from China and other regions.

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Trump even said that he would raise tariffs to 100%, 200% or even 2000% to ensure that China would not sell a single car to the United States . This is to protect America’s Rust Belt industries, Detroit’s auto companies, and to protect America’s manufacturing industry and peers.

To some extent, Trump has actually realized that the US economy is not doing well, and he is even willing to take trade protection measures to protect domestic companies.

China should of course protest this, because global free trade was promised, and it was proposed by European and American countries. Now the United States is going to start deglobalization. Is this short-sightedness of the United States, or is there another reason? It is really hard to understand.

Is raising tariffs good for the United States?

So, is raising tariffs good for the United States? There is actually a lot of debate here.

A more extreme case is the Qing Dynasty, when productivity was very backward and the country was closed to the outside world. Good foreign goods were good but could not be imported because we would also collect high tariffs. This protected the family peasant economy of the late Qing Dynasty.

However, this kind of isolationist policy was unsustainable. Once the door was opened by the great powers, the entire industrial and agricultural ecology was destroyed, and ultimately the late Qing Dynasty was destroyed.

The same is true for the United States. The correct approach is actually the same as China’s reform and opening up. If the technology is not good enough, then we should develop it; if the cost is too high, then we should reduce the cost, instead of enjoying high welfare and high wages while complaining that there is no market for their products and they cannot compete with us.

Trump believes that imposing tariffs can provide the US government with more fiscal revenue , thereby offsetting the fiscal pressure brought about by tax cuts. However, according to economists’ estimates, the revenue brought by tariffs will not be much.

Even if Trump significantly increases tariffs, it can only bring in a maximum of $200 billion in revenue, which is not much compared to the US fiscal revenue of $4.9 trillion.

But what is the problem with high tariffs? Simply put, there is no supply.

After the tax is high, American buyers need to pay huge tariffs for cheap Chinese products, so these products become not so cheap when they reach Americans. And these tariffs are taken by the US government.

Who needs these products? Of course not the wealthy Americans, but most ordinary Americans, even low-income people. They are numerous, and what they need are cheap goods from China and the world.

According to Trump’s approach, if the United States significantly increases tariffs, it is essentially the U.S. government collecting taxes on the poor, which will significantly increase the cost of living for the poor due to tariffs, leading to inflation problems.

This is the price the United States has to pay for “closing its doors to the outside world.”

Getting involved in the power of the Federal Reserve?

On different occasions, Trump has tried to get involved in the power of the Federal Reserve. He believes that the Federal Reserve should be governed by the US government, or at least guided by it. But at this meeting, Trump seemed to soften his stance.

He believes that the US president should have the right to adjust interest rates but will not order action; for example, he believes that he should at least have the right to speak and make suggestions on the Federal Reserve’s monetary policy decisions.

The current Federal Reserve is actually an independent institution composed of 12 regional Federal Reserve Banks, which is not subject to the jurisdiction of the US government. The US dollar it issues has become the world’s largest reserve currency, and even supports the US government’s debt of 37 trillion US dollars.

Therefore, every president has tried to interfere with the power of the Federal Reserve, but ultimately failed.

But we all know that Trump himself is a bold man . It is not impossible for him to try to change this trend. But will Wall Street and other countries in the world allow it? I think there will definitely be obstacles.

After all, the Federal Reserve was independent in the past. Although it would flood the U.S. economy with money and print trillions of dollars to help it through the difficult times when the economy ran into problems, it was still not under the jurisdiction of the U.S. government in appearance.

Once the US president has the power to influence or even decide the Federal Reserve’s monetary policy, it will not be good news for countries around the world.

This means that the US dollar will be over-issued, and it will be easier for the US dollar to become an “economic weapon” and “financial weapon”. And what will follow is the collapse and disintegration of the US dollar’s credibility. The international financial situation is in turmoil.

When Trump was in office, he nominated the current Federal Reserve Chairman Powell and sent him to the position of Federal Reserve Chairman. However, after taking office, Powell did not listen to Trump at all, which made Trump furious.

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