Recently, a storm of media bias has been brewing in the United States surrounding President Donald Trump’s implementation of new tariffs policies upon his return to the White House. These tariffs policies are what the average voters have been hoping for. However, many economists and mainstream media outlets strongly oppose these tariffs.
This biased and closed-minded attitude has led news agencies to overlook some crucial details that could help the public understand the numerous benefits of President Trump’s tariff policies towards China, beyond just the potential risks.
This bias stems from the century-old orthodoxy of free trade, mainly rooted in three aspects in the United States. Firstly, engaging in international specialized production where a country produces what it is most adept at, undoubtedly leads to short-term profits due to lower prices. (The cost of national security risks posed by trading with competitors is often ignored.)
Secondly, the close relationship between the 1930 Smoot-Hawley Tariff Act and the Great Depression in the United States is significant.
Thirdly, the hope post-World War II for global free trade to ensure lasting peace. For most scholars, this aspect has been discussed enough. Levying tariffs on China is a dark cloud without a single ray of hope.
The notion of “peace through trade” rests on the idea that the most powerful international merchants who would lose profits during wars would influence governments to refrain from engaging in conflicts. With Iraq’s invasion of Kuwait in 1991, Russia’s invasion of Ukraine in 2014, Iran’s attack on Israel in 2023, the continuous rise in fentanyl attacks by the Chinese regime against the US over the past decade, as well as Beijing’s consistent military threats against Taiwan, the perfect fantasy of achieving peace through trade should be shattered.
Trade does have a positive impact on peace to some extent. However, when terrorist states pursue violent expansionism rather than peaceful interests, it is not enough to ensure reasons to continue free trade with them. In such cases, gradually increasing tariffs on competitors as a punishment or deterrent for future conflicts makes sense. Economists should consider levying tariffs on enemy states as a “sin tax,” representing the expected cost of trading with and supporting the future wars of those enemy countries.
Even allied or partner countries like Mexico and Canada can be prevented from shirking responsibilities through tariffs. They have neglected their duty to prevent fentanyl smuggling into the US. Canada has not fulfilled the agreement to allocate at least 2% of GDP to defense. If these responsibilities are evaded, others will surface in the form of tariffs.
Fentanyl (and other synthetic opioids) causes over 80,000 American deaths due to overdose each year.
When President Trump threatened to impose 25% tariffs on Canada and Mexico, both countries swiftly reached agreements with the US to enhance border security, thus averting the tariffs. President Trump not only achieved victories in fentanyl and border security issues but also spearheaded a new economic strategy that finally leverages the long-neglected robust US global power. Despite the milestone and relatively low-cost wins President Trump has secured, mainstream media has scarcely offered positive commendations.
This power refers to the ability to approve or reject foreign goods entering the US market. Given the US’s democratic governance and long-standing support for human rights worldwide, we confront adversaries like Communist China and more partners like Canada and Mexico shirking their responsibilities. This power can be wielded to influence our adversaries and partners towards advancing greater national interests.
One of the world’s two major economic entities, the European Union, also tends to utilize its power to support democracies. If the US and the EU coordinate our tariff forces to collectively combat dictators and terrorists worldwide, these seemingly entrenched issues can be significantly reduced, if not entirely eliminated in theory.
One point the mainstream media has overlooked but which highlights their bias is regarding the 10% tariff imposed on Chinese products effective on February 4, following the 25% tariffs previously levied during Trump’s first term. The current effective rate is now 35%. However, mainstream media often fails to acknowledge this higher figure. Instead, they tend to compare the 10% tariff on China to the threatened (but not implemented) 25% tariffs on Canada and Mexico, erroneously implying this one-sided tariff approach is not a suitable way to treat our partners, showing Trump’s administration’s weakness towards China. In reality, the opposite is true and starkly different.
Lastly, another purpose of imposing tariffs is to shift manufacturing from China and other locations to the US, including halting the transit of Chinese goods through countries like Mexico and Vietnam, thereby boosting American job opportunities and industries. Yes, reimposing a 10% tariff on China may slightly increase prices. However, when Trump’s 1.0 version levied a 25% tariff on Chinese products, it only led to a slight increase in the inflation rate, about 0.25%, equivalent to 25 cents on a hundred-dollar bill. Goldman Sachs in New York and the Peterson Institute for International Economics in Washington DC seldom cite this fact.
The steel and aluminum tariffs are entirely different. According to a Harvard University study, the same tariffs in 2018 only created 1,000 steel and aluminum jobs but lost 75,000 downstream manufacturing jobs. Nevertheless, maintaining a robust metal industry in the US is crucial to prevent hostile nations like Communist China from severing our supply chains during wartime.
The Wall Street Journal asserts that entrepreneur and author John Gardner and former Chief Strategist of the Trump administration Steve Bannon are members of the advisory team proposed by Trump to establish the External Revenue Service (ERS), which will manage tariffs similar to how the Internal Revenue Service (IRS) handles domestic taxes.
Gardner referred to “short-term thinking” when responding to the statistics about the 75,000 lost manufacturing jobs. He stated, “With the increase in orders for American steel producers, this will lower prices for domestic steel consumers. Economies of scale will prevail, it just won’t happen by the next financial quarter for Wall Street.”
Gardner likened the US to a drug addict, viewing imported goods as products based on slave labor. He warned that unless immediate action is taken, the dismal outcome of the “Economic Bazaar Logic Test” described in his book “Manufacture Local: How to Make America the Manufacturing Superpower of the World” will come to pass. In that book, a benevolent village overly reliant on foreign pirates for cheap goods is eventually destroyed by those pirates.
Voters seem to be recognizing the necessity to combat these pirates, as evidenced by their renewed trust in Trump by electing him as their new president.
The voice calling for nationalist populism is getting louder, and President Trump’s efforts to reshape US economic strategies from a more protectionist standpoint are gaining traction. Although criticisms and debates continue, the questions around the tariffs policy seem far from over.