Tariffs Won’t Produce Prosperous Trade Deals

Recent policy from the White House has protectionists lauding President Trump’s so-called “trade deals” around the world. Regardless of the legality of these policies, it’s certain that they entail grave economic risks for the US. The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

In previous “Tariffs Won’t . . .” articles, I pointed out that President Trump’s tariffs won’t reverse the decline of America’s industries, save the US dollar, or optimize the well-being of productive Americans. The White House summary of the US-Japan Strategic Trade and Investment Agreement, the first deal of Trump’s “Golden Age” negotiated with a major trading partner, provides disturbing confirmation of just how perverse and outlandish the economic fallacies driving Trump’s policies have become.

The major trade provisions are that American importers will generally have to pay 15 percent “reciprocal tariffs” to the American government for the Japanese goods they buy, though for certain sectors the tariff rate will be much higher; 50 percent tariffs in the case of steel and aluminum products, for example. Specific American exporters will benefit from reductions in Japanese regulatory or quota barriers and from Japanese government purchases of their products, like a pledge to buy 100 commercial aircraft from Boeing.

There are, however, another important set of provisions dealing with what is euphemistically labeled “strategic investments” of $550 billion by the Japanese government in particular American industries—specifically loans and loan guarantees for LNG production, production of advanced fuels, and grid modernization; for semiconductor manufacturing and research; for the mining, processing, and refining of rare earth minerals; for pharmaceutical and medical device production; and for commercial and defense shipbuilding.…