Americans are real victims of our trade war with Mexico and China
America has declared war on China and Mexico, but it is a new style of warfare. Or at least it seems so. With the latest volley of levied and threatened tariffs on Chinese and Mexican exports, POTUS has thrust the U.S. into a new phase of economic warfare against both competitors and friends.
Americans, however, will end up paying the price.
Modern warfare is no longer just conducted by guns and bombs. Wars today are ongoing and take place during what seems like peacetime. Just because a financial war appears bloodless does not mean it is also harmless or without victims. In fact, the silent, unseen economic warfare Donald Trump is waging — and threatens to escalate — is highly effective at hurting both people and nations.
As with all wars, this type of warfare requires sacrifice. The homefront pays in blood and treasure for active and violent military conflict as in Afghanistan and Iraq. In a tariff war, Americans pay a price in the form of invisible regressive taxes. Consumer goods and items made with imported parts and materials go up in price because tariffs add to the ultimate cost. Foreign tariffs are essentially domestic taxes.
The taxes we are used to talking about are paid at the checkout counter or get pulled from our paychecks or make us dread April 15th. They are visible taxes. Tariffs, too, are taxes — just different and less visible. Import tariffs like the ones on China and, soon, on Mexico are the money the U.S. government collects at a border for goods crossing into the United States, making those goods more expensive at home. They are reflected in the final price of cars, flat screens, and even food.
Despite the congressionally passed 2017 tax cut that helped many corporations and some individuals last year, the tariff-tax increase is immediately costing us and is expected to add even more pain to average household budgets. Unlike the corporate tax cut, the Trump tariffs are congressionally-unauthorized and directly felt by those least able to handle the burden. And that doesn’t even include the foreign retaliatory costs to farmers, additive manufacturers, and exporters. It is a burden Americans must bear, but a sacrifice that Americans are not being asked to make. Instead, it is being imposed.
Modern political leaders generally avoid highlighting political trade-offs and seem unwilling to ask Americans to make sacrifices.
When George W. Bush reflected on the need for Americans to sacrifice for the expensive and ongoing post-9/11 wars, his reflex was to tell America it needed to increase consumer activity. Shopping became patriotic. “I encourage you all to go shopping more,” said Bush.
President Trump is even worse. He’s not only trying to hide or divert citizens from the truth, he is actively prevaricating. He inaccurately says that an adversary is paying the price and filling America’s coffers with higher tariffs. Americans in the lower and middle income brackets pay a higher proportion of their income in taxes by covering the cost of tariffs. They make less, have less to spend, and everything they buy costs them a higher percentage of their income. Simple math.
During previous wars, leaders were not happy about the trade-offs their nations would have to make to conduct war, but they leveled with us. Rationing, privation, service, levies — these were all necessary and requested. We understood it was a patriotic duty to do our part, pay a price, and pull together to win a war. Western leaders like Franklin D. Roosevelt and Winston Churchill would acknowledge the challenge, threat, and cost of these actions. The Kennedy Doctrine made it clear that Americans would be willing to “pay any price, bear any burden, meet any hardship” for the cause of liberty.
Trump is averse to entering military conflicts, despite his bellicose bluster. That’s a good thing. Instead, however, he threatens to use American military force as a leverageable tool to conduct war by other means. Those other means? The deployment of economic and business weapons Tools Trump believes he understands better than anyone. Finance, debt, taxation, trade. What we are now witnessing is President Trump’s unabashed unleashing of these fiscal tools and financial weapons on both friend and foe.
When will this administration let Americans know that they are paying dearly to fight these fights? Today’s wars may ultimately be worth fighting, but not if we have to be fooled to sell our futures in the process.
Markos Kounalakis is a McClatchy foreign affairs columnist and visiting fellow at the Hoover Institution.
Originally published on 7 June 2019 at https://www.miamiherald.com.