This is the latest Trump promise to the poorest Americans, who he dupes into thinking he will give them something for nothing, because someone else will pay for the benefits they want.
Remarkably, Trump thinks the following:
(i) exporters in foreign countries will absorb the costs of US government tariffs without raising their prices.
(ii) foreign governments will not adopt tit-for-tat tariffs. Such foreign tariffs would make it harder for US exporters to sell products overseas and thereby reduce taxable income from overseas trade.
(iii) the tariffs on imports will create a vast reservoir of government income which he can use to fund US domestic programs. Free childcare! Vast wealth for everyone!
(iv) the use of tariffs in this way will cause the US no longer to be running a trade deficit.
The obvious truth is that enacting this policy means the US will be reducing its participation in global trade in both directions. Forein sellers will raise their prices and so what imports are made will be done at much higher prices. Foreign governments will put tariffs on US goods. Americans will be the poorer for it. There will be no powerful spigot of new income to the US government to fund domestic services. There's no trade deficit when there's no trade to be done. Also, you can't buy anything from abroad and you can't sell anything to foreigners. Genius!
He has no idea that as far as the market is concerned, competitive international trade is a common good, as a result of which the US and its trading partners are beneficiaries. It isn't a case of only one country, the US, dictating terms so that it benefits at the cost of everyone else.
It ought not to be needed to be said: there's no such thing as a free lunch.
It's really stunning that US citizens are contemplating the election of a blithering idiot.
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