Trump’s Un-American Activities

“Our plan is commerce, and that, well attended to, will secure us the peace and friendship of all Europe; because it is the interest of all Europe to have America a free port,” wrote Thomas Paine in his pamphlet Common Sense (1776). While advocating American independence from Great Britain, Paine was setting out a foundational principle of the nation the 13 colonies would forge.

Commerce, as in free trade as it could be conceived then, would secure the freedom of the United States and help it prosper. And in the larger scheme of things, it would secure peace for the new country and its partners.

President Donald Trump’s tariffs, which have set off a global bloodbath on the markets and are bound to make life more difficult, not easier, for Americans in the short and medium terms, exhibit not only bad mathematics but also ignorance of history.

Trump argued that the Great Depression would never have happened had the US kept its tariffs high. But tariffs hadn’t ended before either the Wall Street Crash of October 1929 or the Great Depression that set in thereafter. While the crash wasn’t the cause of the Depression, tariffs didn’t cause it either. A desperate and misinformed Congress passed the Smoot-Hawley Act of 1930 which increased tariffs against the advice of economists and experts who, in retrospect, knew better.

Many such experts had signed a petition urging President Herbert Hoover not to sign Smoot-Harvey into law but he did. The result was catastrophic. Prices went up, and soon many Americans, jobless, lining up at soup kitchens, and in all cases with much less money in hand, were not being able to afford food. Smoot-Hawley, somewhat like Trump’s tariffs, was not sector-specific but applied across the board and made everything much worse.

As for the bad math, everyone following the rollout of the tariffs knows by now that all that the Trump team did was take a country’s trade deficit with the US, divide that figure by its exports to the US, and then half the resulting value. Not only are these not reciprocal tariffs, which would have entailed a detailed analysis of each trade agreement and intricate adjustments, but they fly in the face of the logic of a trade deficit which is not necessarily a bad thing. If I go to the market and buy fish with my money, I run a trade deficit with the person selling me the fish. But that’s because he is providing me a good I want to consume but cannot produce myself. That doesn’t leave me poorer. Nor am I going to barter stuff from my home to buy his fish.

If Trump paid attention to the Declaration of Independence, he would find that America’s founding was a reaction, among other things, to European mercantilism which imposed taxes and tariffs. Protectionism was not a founding principle of the United States. Rather, it was the free movement of people and goods. That was the very idea of sovereignty for the Founding Fathers. One of the biggest American grievances against the Crown was its stranglehold on the colonies’ ability to trade freely with the world as they pleased, as it suited and benefitted them, while they had no representation in the British parliament to influence law and policy that applied to them.

As a result, when the United States came into being, free trade went hand-in-hand not only with sovereignty but also the curtailing of executive power, of any overreach on the part of first the king and then the president. James Madison, in the 47^th of the Federalist Papers (written by Madison, Alexander Hamilton and John Jay under the pseudonym Publius, 1788), wrote: “[the] accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny”. They wouldn’t have approved of a president signing executive orders to put up tariffs and jeopardise global trade and, above all, do America harm.

In one stroke, Trump has thrown mathematics, American values and its democratic safeguards out of the Oval Office window.

Common SenseDonald TrumpThomas Painetrade tariffUS-India trade talksWall Street Crash