Tariffs and protectionist trade policies in general yield more economic harm than good.
It is therefore a positive development that the Trump administration will allow businesses harmed by the current pandemic to defer payments on import tariffs.
While the better policy would be the repeal of all tariffs imposed by the administration in the first place, this is a welcome reprieve.
On Saturday, President Trump signed an executive order giving Treasury Secretary Steve Mnuchin the authority to provide relief to certain businesses.
Qualifying businesses that have experienced large revenue declines will be able to postpone certain payments to the government for 90 days.
The tariff relief won’t apply to goods such as aluminum and steel. The Trump administration has cited national security concerns to justify those particular tariffs, even though the president himself has primarily focused on the supposed economic benefits of such tariffs.
Still, while the relief doesn’t cover all tariffs, it’s at least an acknowledgment from the administration that the tariffs do in fact come with detrimental impacts.
“By postponing the deadline to deposit certain duties, taxes and fees for 90 days, we are providing much-needed relief to affected businesses,” Mnuchin said. “This will protect American jobs and help these businesses get through this time.”
Tariffs, it must be remembered, are just tax increases.
As with any tax increase on businesses or individuals, tariffs are a government-imposed cost burden. And as with any tax increase, the benefits should outweigh the costs.
Trump has outlined his rationale for the tariffs. As he tweeted on Dec. 4, 2018, “I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN”
After taking into account the detrimental impacts tariffs have had on American companies that rely on imports, it is not apparent that our nation’s economic standing has in any way been improved by the standards outlined by the president.
In December, the Federal Reserve’s Divisions of Research & Statistics and Monetary Affairs published a report that found “tariffs have been a drag on employment and have failed to increase output.”
There’s also no reason to believe that the president’s trade policies have “made America rich again.”
All they have been is a detrimental tax increase on American businesses and consumers.
So, while we’re glad American businesses subject to the president’s harmful tax increases will get some breathing room, the better move would be for the tariffs to go away completely.