Discuss whether Trump’s economic policies and appointments have
comported more with a biblical model of statesmanship or that of
statism. You must provide numerous and specific points of evidence
to support your assertions; and in doing so, you must effectively
articulate a biblical model of statesmanship.
President Trump economic policy was very centralized, controlled and nearly
without precedent in modern U.S. history.[1]
Trump’s economic policies were not biblical. During his term, his
administration turned its back on the free market and adopt an ever-growing
role for the government in the day-to-day workings of the economy. I believe
President Trump’s economic policies have complied with statism. He started
his trade war with other nations by imposing tariffs on their imports. A
biblical model of statesmanship does not favor tariffs. [2]
For the time after his inauguration, he imposed tariffs on Argentine and
Brazilian aluminum and steel. The justification offered for those tariffs was
that those two countries were purportedly manipulating their currencies to
the detriment of U.S. farmers. However, his justification was not accurate.
Argentine and Brazilian currency weakness was prompted by economic
weakness and social unrest in the region.
President Trump’s America First trade policy was not effective. He failed to
deliver promised result from his trade war and tariff threats, but he widened
the US trade deficit and plunged world’s economy. President Trump also
threatened to raise tariffs on Japanese and European automobiles, however
he did not do that because he missed the deadline for following the Section
232 of Trade Expansion Act of 1962.
Trade Expansion Act of 1962: Section 232 of this law allows presidents to tax
foreign imports if the Department of Commerce deems them a threat to
national security. Trade Expansion Act of 1962 is a Cold War-era defense
industrial base. For imposing higher tariffs on European autos, Trump agreed
that some imported vehicles and components are weakening our internal
economy and could harm national security.
In august 2018, President Trump also attempted to double tariffs on Turkish
steal, but a New York based court rejected his decision[3] for failing to act on
Section 232 within deadline.
Section 232 of the law establishes a window of 90 days for a president to
impose a tariff after receiving a report from the U.S. Department of
Commerce.
Many conservatives promote protectionism, but they miss the point.
Protectionism was initially made to cultural preservation; it was not
introduced for economic reasons. President Trump imposed higher tariffs on
steel and aluminum lower prices; instead, Trump’s tariffs have led to lower
prices, less business, lower profits, and fewer jobs. Steel and aluminum
fabricating industries have been hurt. Ford alone lost $1 billion from higher
prices.[4] There is no substantial evidence to support if Trump trade policy
benefitted US economy. Yale’s Lorenzo Caliendo published an article “Despite
Job Losses, U.S. Benefitted from Surge of Trade with China”, but he failed to
substantiate the positive impact of higher tariffs on the US economy.
David Stockman opposed Trump’s economic policy and he called his plan to
increase tariffs, “an absurd, dangerous and stupid policy,” [5]
According to Gwartney et al, when government impose tariff on goods, the
business has to pass on that amount to consumers, so tariffs is ultimately
punishing the US consumers. They don’t really impact foreign manufacturers.
The Smooth-Hawley Tariffs Act of 1930 pushed the average tariff rate from
upward to 60 percent and it was one of the reasons that contributed
significantly to the Great Depression. [6]
Trump imposed higher tariffs on foreign goods in order to boost domestic
production. Normally this will push local good consumption at home and
make it hard for the consumers to buy foreign goods. This sounds awesome
for the America First and other protectionist slogans. However, evidence
shows US manufacturers do not have capacity to deliver similar good on a
lower or same price as foreign imports, because of the higher labor cost. If
you hire an engineer for a domestic manufacturing company, it will likely
cost 100% more than similar workforce in China or other low labor cost
market.
Generally, tariffs do not hurt foreign import supply to the US, they just
increase prices. Because domestic market cannot fulfil the demand and the
demand has to be met with foreign imports. Price increase to an item as a
result of tariff is passed on to consumers, essentially. I again believe
President Trump’s economic policy was not within the biblical teachings, but
that of statism.
References:
[1] Keith Johnson. “In Trump’s Economy, the Invisible Hand Belongs to the
Government” Foreign Policy, April 5, 2019.
https://foreignpolicy.com/2019/04/05/in-trumps-economy-the-invisible-hand-
belongs-to-the-government/
[2] Fischer Kahlib, “Trump’s economic policy” (video lecture in PLCY704,
Liberty University, Lynchburg, VA, June 21, 2022)
[3] Transpacific Steel LLC v. United States et al.
[4] Jon Basil Utley, “Trump’s Trade War Has Dire Consequences,” The
American Conservative. Nov 6, 2019,
https://canvas.liberty.edu/courses/288738/modules/items/29179930
[5] Michelle Fox, “We’re heading to ‘massive trade war’ because of Trump’s
‘absurd’ policy: Reagan OMB director,” CNBC, July 10, 2018,
https://www.cnbc.com/2018/07/10/us-heading-to-massive-trade-war-thanks-
to-trumps-policy-stockman.html.
[6] James D. Gwartney. Economics, Private and Public Choice. (New York:
Academic Press, 2018), 372.
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