1. Reagan said if you want less of something you tax it if you want more something you subsidize it.
This is a pretty good truism.
This is a pretty good truism.
2. So let's take this truism to trade period after all a tariff is nothing more than a tax.
3. Right now we have very low tariffs which means we have a lot of trade. But you have to look closer what exactly are we taxing and subsidizing?
4. The low tariffs can be considered a subsidy for foreign trade. Whereas other countries High tariffs are a tax on our trade.
5. So you have our current policy subsidizing Imports while allowing the taxation of our exports. Per Reagan this will result in much more Imports than exports
6. It will also result in more trade in total but again the trade is imbalanced.
7. What Trump is trying to do with his policy it's the battling balance the tax on the exports with the subsidies on the Imports.
8. Free Traders think if you lower the tax on Imports that people will magically lower their taxes on our exports. Utopia thinking.
9. What does all this mean? Again tariffs are tax. They go into the coffers of the government. Our current tariff policy in effect promotes massive Imports and allows other countries to reduce are exports.
10. Any Republican/ who supports tax cuts to Spur economic growth in the country should be supporting Trump's trade policies. Anyone who supports globalization should be against his policies.
11. Because at the end of the day whatl Trump is trying to do is lower taxes on our exports which will boost economic activity in USA while stopping to subsidizing Imports which will reduce other countries' economic activity.
