Donald Trump achieved the presidency telling the American people he would “Make America Great Again.”
Given that during eight years of Barack Obama’s presidency there was not a single year in which national satisfaction, as measured by Gallup, averaged above 30 percent, tapping into Americans’ general dissatisfaction with the state of the nation was good campaign strategy.
This February, national satisfaction reached the highest its been under Trump, 36 percent. However, in March it plunged back down to 28 percent. And this big drop was fueled by a big drop among Republicans. National satisfaction among Republicans dropped from 67 percent in February to 52 percent in March.
Maybe there’s reason to believe that Trump’s own Republican constituency is not buying that tariff saber-rattling and trade protectionism is what is going to make America “great again.”
The stock market surged some 30 percent from Trump’s election until the beginning of 2018. However, since the beginning of this year, with all the trade war rhetoric, it’s now down 8 percent.
Estimated overall value of the U.S. stock market early 2018 was around $30 trillion. So 8 percent deterioration means a loss of wealth of $2.4 trillion.
A price tag of $2.4 trillion in lost wealth to allegedly combat a $376 billion trade deficit with China with tariffs suggests that this might not be the best course of action.
The trade deficit is the supposed boogeyman. In 2017, we sold $130 billion in product to China and bought $506 billion from it—a $376 billion trade deficit. Suppose China just decided to stop selling to us and just bought from us? We’d have a $130 billion surplus with China. Would that be good?
Americans are buying $506 billion in raw materials and consumer goods from China because we want this stuff. It makes us better off. We like the low-priced products from China we find in our department stores. And the raw materials we buy from China result in cheaper finished products that we manufacture here in the U.S.
According to economics blogger Mark Perry, “38 Americans work in industries using steel and aluminum for every worker making steel or aluminum.”
Veronique de Rugy of George Mason University’s Mercatus Center reports that when George W. Bush imposed tariffs on steel in 2002, 200,000 workers in industries using steel lost their jobs the following year—more than the total number of jobs in the steel industry that year.
What was the 30 percent stock market gain from Trump’s election until early 2018 telling us? I believe these gains reflected the deregulation over this period, capped off with passage of the tax bill in December 2017.
These are the kind of measures that “Make America Great Again.” Measures that advance our economic freedom and move control of politicians and government out of our lives.
We lose when politicians start picking winners and losers, whether domestically or internationally. Let the marketplace pick winners and losers.
Where should we be directing our priorities now?
A group of Hoover Institution economists, including former Secretary of State George Shultz, just published an op-ed in The Washington Post about the dire implications of the looming debt crisis in our country.
It writes that soon the national debt will reach $20 trillion—equal to the size of our entire gross domestic product. This poses a serious threat to our economic well-being.
New projections from the Congressional Budget Office forecast unprecedented trillion-dollar federal budget deficits as far as the eye can see.
Unrestrained spending produces these huge deficits, which we finance with debt. The main culprit, according to the Hoover experts, is entitlement programs—Medicare, Medicaid, and Social Security.
I think the president should focus attention and energy on this debt crisis, rather than on the dubious benefits of a trade war. Getting America’s fiscal house in order will make America great again.