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I would like to speak out in support of @realDonaldTrump on tariffs. Donald Trump has recently lowered out trade deficits with the rest of the world to its lowest amount for 33 years according a Breitbart article I had read.
Regardless, Donald Trump has highlighted a real need for the President to be engaged in our trade policy, real time and at a granular level country by country.
Trump initially exposed how even our supposed allies had tariff regimes which were devastating our trade deficits and through that harming our country.
He also showed that the only real way to counter this is not with old trade agreements made years or even decades ago because the speed of commerce is now daily.
Tariffs are tools used by a country to limit the effects of the devaluation of their currency when they have a positive trade imbalance. When a country has a positive trade imbalance then this means they are sending more of their currency to foreign countries while not receiving enough of their own currency. Thus on the world stage there is an oversupply of their currency and as such the value of their currency drops. They need more money from the other country to buy their goods and a new equilibrium will be found zeroing out the trade deficits.
This zero trade is the default when there is free trade and an equal footing. It is also what we should be aiming toward.
The problem is that trade is a Nash equilibrium problem called the Prisoner's Dilemma. Two prisoners are caught and the best course of action is for both to stay silent and not turn on each other. If they do they get a year time in jail each. If one turns and the other does not he will get off with immunity while his partner gets 10 years and if both give evidence then they get five years.
Tariffs work the same way if I tariff you then when the money flows back to your country it is made up when you buy my goods through the tariff you pay. I get my currency back. The problem is the tariff overall reduces the trade and thus GDP. If I can tariff a country and they don't tariff me back then that country takes the brunt of the loss.
By limiting tariffs we increase the world Domestic product. This is Ricardo's theory of comparative advantage. Certain countries have natural advantages in producing products over their neighbors. Coffee is cheaper to produce in Ghana and has a greater quality due to the soil and climate. When there is free trade then Ghana is free to maximize their coffee production because they can buy wheat from places like Kansas.
When any country starts tariffing the other then that natural balance is disrupted. Countries will then be forced to stop producing goods they have advantages at in order to produce goods they need. Overall the economy will decline.
What Trump has shown us is that a President who takes this seriously and focuses on reducing tariffs can create a boon for the United States economy. This has to be managed however with negotiation and agreement and if need be some coercion.
The success of this is being lost in the current media nonsense.
The importance of this, is that this is something every president should begin their administration with a review of trade policy which they should implement and which is corrected on at lease an annual basis. The President should be evaluated by the American people on the success of their trade policy. There is an objective measure which can be pointed to, the national trade deficit. Furthermore, our individual trade balances with any foreign country can be evaluated to show objective evidence of our trade policy in dealing with them.
To this end the supreme court decision, even though it did not overwrite Trump's ability to continue his trade regimen points to a limitation the founding fathers did not see in the writing of the constitution. They lived in a time when wooden ships took a month to cross the Atlantic and trade negotiations took time, potentially years. At this timeframe there was enough time for trade policy to be controlled directly by congress.
In modern times congress has acknowledged this which is why there are laws in place that give the president some authority. I think what we are seeing with the lawfare easily limiting our President is that this must change.
I believe a new amendment to the constitution is necessary. One that alters the control of tariffs from congress to the executive. This should put the congress in the role of evaluating policy, possibly granting them control over tariff money collected but the trade deals and negotiations should be able to be done by the president through an executive order.
Congress could be given some authority overall trade direction but the ultimate authority is with the President and the executive.
You can say to me but this won't be passed at best while Trump is in office and it gives democrat President's this authority as well. I agree. It will give them the authority to do as they wish however it also gives them the responsibility for controlling it and as I mentioned there is a definitive objective measure as to the President's trade policies, the trade balance.
@Timcast I would be honored if you could please address these points on your show.
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