Tariffs

Both side on the tariffs debate need to understand the nuance of the debate. For supporters of Tariffs who view McKinley tariffs as a model, two things that need to understand, tariffs were the principal way the federal government raised money and government spending was only 10 percent of the total economy. The depression of 1893 may have been caused by tight monetary policy and tariffs were higher as result of tariffs passed in the previous administration. McKinley following the Spanish-American war was moving toward a reciprocal trade policy similar to what we may end up with Trump final negotiations.

In the 1920’s we had high tariffs but lower tax rates and reduced both the national debt and spending. Harding and Coolidge inherited high tax rates from the Wilson administration left over from World War I. Harding economic plan saved America from the 1920’s great depression. Hoover raised tariffs even higher, and he also increase spending, brow beat corporations into keeping salaries higher and then raised taxes on top of that. It didn’t help that federal reserve saw circulation of money drop by a third.

1950’s and 60’s saw United States move forward on economic and free trade aided and Reagan revolution of lower tax rates aided in a boom that lasted a quarter of century.

Trump will keep tariffs on China as part of slowing Chinese down and use tariffs negotiations with leading economic powers to isolate China and encourage companies to relocate here with Trump lower tax rates, reduce regulations and increase energy productions. We will see.