Trump Reinforces Tariff Policy in Front of The Economic Club of New York

Former President Trump went into what some might consider a lion’s den full of cufflinked transnational financiers and billionaire money managers on Thursday – but during a one-hour speech at The Economic Club of New York, Trump stuck to his guns on tariffs, called NAFTA “the worst trade deal ever made”, and said his China tariffs never caused inflation.

He said his trade and economic policies, if granted a second term, would “encourage domestic production instead of discouraging it.”

“Our manufacturing wealth was created with fewer regulations and lower taxes and most revenue came from tariffs from other countries,” Trump said, harkening back to the early days of American industrialization, over 120 years ago.  “Now we impose lower tariffs or even no tariffs and let those foreign producers sell here. We have the lowest tariffs in the world and punish American producers,” he said.  The bound tariff rate for the U.S. is around 3%, similar to that of the U.K. and lower than the European Union, Japan and Canada.

“I have many companies tell me, ‘sir I cannot compete: they are sending kitchen cabinets, washers and dryers, motorcycles.’ I should get some of those companies to talk to you, (tariffs) saved their businesses,” he said.

For sure tariffs, namely anti-dumping tariffs, saved America’s kitchen cabinet industry. And washing machines, which were increasingly imported from South Korea and Mexico, remained a domestic concern thanks to tariffs.

Trump said he wanted the U.S. “to be the manufacturing superpower in the world. We can do that intelligently with trade policy that uses tariffs that encourages production here. We deserve it. We have helped other countries get rich at our expense for the last fifty years. We can build ships again, and will create the biggest and greatest middle class in the history of our country with higher paying jobs by using our heads and not letting other countries take advantage of us,” he said, adding that he would ensure that the U.S. “has a giant steel and aluminum industry” that complements an “industrial base that can take care of our defense needs 100%.  Some might call it economic nationalism. I call it America First.”

Then he went into a little history lesson. He spoke of 25th president William  McKinley; he served from 1897 to 1901 before being assassinated. He famously created the McKinley Tariff Act of 1890 while Chairman of the House Ways and Means Committee and then passed the Dingley Tariff Act in 1897 that raised tariffs.

“This is the policy that built this country and this is the policy that will save our country,” he said, alluding to his own tariff ideas.

Trump’s talk of tariffs recently ignited a bunch of headlines and research papers from economic think tanks saying the policy would increase costs to individual Americans by around $4,000 per person.  This is an incrediblenumber because it does not account for price competition, domestic supply increased caused by some reshoring or production in free trade countries that will not be hit with the tariff proposal. Nor does it consider Chinese overproduction of certain tariffed, global commodities that send prices lower. This has been the case with solar products for example, now at their lowest prices in more than a decade despite the Section 201 solar safeguard tariffs and anti-dumping duties against four Chinese solar multinationals in Southeast Asia.