For decades, long before he became a politician, Donald Trump has complained about our nation’s tariff agreements with many of our closest trading partners. His experience in international business gave him this perspective. The result has been an imbalance of trade, where we have a negative trade balance of $1.2 trillion annually. More than a trillion dollars of goods are coming into this country compared to what we ship overseas. America has become a consuming nation more than a producing nation. That can only last so long before an economic disaster arrives. That is one of the reasons why our national debt is approaching $37 trillion. Last year, the deficit added $2 trillion to the debt, more than half the result of our trade imbalance. Just to be clear on definitions, the deficit is how much our nation’s annual budget is in arrears, whereas the debt is the accumulation of year after year of deficit spending.
Let’s be clear about this: a tariff is the tax one nation puts on the imports that come from products manufactured overseas and shipped to their market. Often, the motivation is to make imported goods more expensive with the tariff-tax to protect the domestic market. Trump wants to right that ‘sinking ship’ and correct the trade imbalance. If you stop to think about it, “free trade” means there are no tariffs or regulations which hinder or prohibit trade. Shouldn’t that be the goal?