Will Speaker Ryan ever learn to deploy an effective tariff?
Ryan’s Border Adjustment Tax proposes a 20% tax (tariff) on imports produced abroad. The plan provides a 20% rebate for corporations on products produced in the U.S. and sold abroad. While this sounds simple, it creates complex problems.
There are several things wrong with Ryan’s two pronged plan:
- It provides a 20% subsidy only to corporations who export, harming domestic only producers. Oftentimes, domestic only producers compete with large domestic’s who export already. Ryan’s plan puts a thumb on the scale for large corporations.
- It does nothing to target the countries who already manipulate currency. They will defeat Ryan’s 20% tax by further devaluing their currency. Ryan’s stated objective, balancing trade, fails.
- This plan does nothing to neutralize U.S. multi-national corporations producing overseas, shielded by currency manipulation, from flooding America with foreign made product.
- Ryan wrongheadedly treats trade surplus countries the same as trade deficit countries.
President Trump has proposed a tax (tariff) on nations that take the mercantilist approach. Those nations build their economy on heavily imbalanced trade. President Trump has it right.
In particular, the mercantilist countries that we should be laser focused on is China (-318.4), Japan (-73.4), Germany (-67.2), South Korea (-20.7), and Taiwan (-13.2). They are a subset of this Deficit table.
The U.S. Treasury department issued a report in May of 2016 naming names. Those particular countries manipulate their currencies or subsidize their industries to the detriment of American imports. These are countries who are waging the battle against American workers. Therefore, they should be the primary focus of American attention as it relates to trade imbalance, but not the only focus.
Trans Pacific Partnership favored certain corporations and was heavily supported by Speaker Ryan and like minded globalists in D.C. It was a loser of a deal for America. Why is Speaker Ryan thwarting the will of the people? We hired President Trump to tilt the playing field in favor of American workers! (more…)