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May 14, 2019
5:02 AM EDT

A shipping container is offloaded from the Hong Kong based CSCL East China Sea container ship at the Port of Oakland on June 20, 2018 in Oakland, California. (Photo by Justin Sullivan/Getty Images)

A shipping container is offloaded from the Hong Kong based CSCL East China Sea container ship at the Port of Oakland on June 20, 2018 in Oakland, California. (Photo by Justin Sullivan/Getty Images)
As his limo carried him to work at the White House Monday, Larry
Kudlow could not have been pleased with the headline in The Washington
Post: "Kudlow Contradicts Trump on Tariffs."
The story began: "National Economic Council Director Lawrence Kudlow
acknowledged Sunday that American consumers end up paying for the
administration's tariffs on Chinese imports, contradicting President
Trump's repeated inaccurate claim that the Chinese foot the bill."
A free trade evangelical, Kudlow had conceded on Fox News that
consumers pay the tariffs on products made abroad that they purchase
here in the U.S. Yet that is by no means the whole story.
A tariff may be described as a sales or consumption tax the consumer
pays, but tariffs are also a discretionary and an optional tax.
If you choose not to purchase Chinese goods and instead buy
comparable goods made in other nations or the USA, then you do not pay
the tariff.
China loses the sale. This is why Beijing, which runs $350 billion to
$400 billion in annual trade surpluses at our expense is howling
loudest. Should Donald Trump impose that 25% tariff on all $500 billion
in Chinese exports to the USA, it would cripple China's economy.
Factories seeking assured access to the U.S. market would flee in panic
from the Middle Kingdom.
Tariffs were the taxes that made America great. They were the taxes
relied upon by the first and greatest of our early statesmen, before the
coming of the globalists Woodrow Wilson and FDR.
Tariffs, to protect manufacturers and jobs, were the Republican
Party's path to power and prosperity in the 19th and 20th centuries,
before the rise of the Rockefeller Eastern liberal establishment and its
embrace of the British-bred heresy of unfettered free trade.
The Tariff Act of 1789 was enacted with the declared purpose, "the
encouragement and protection of manufactures." It was the second act
passed by the first Congress led by Speaker James Madison. It was
crafted by Alexander Hamilton and signed by President Washington.
After the War of 1812, President Madison, backed by Henry Clay and
John Calhoun and ex-Presidents Jefferson and Adams, enacted the Tariff
of 1816 to price British textiles out of competition, so Americans would
build the new factories and capture the booming U.S. market. It worked.
Tariffs financed Mr. Lincoln's War. The Tariff of 1890 bears the name
of Ohio Congressman and future President William McKinley, who said
that a foreign manufacturer "has no right or claim to equality with our
own. ... He pays no taxes. He performs no civil duties."
That is economic patriotism, putting America and Americans first.
The Fordney-McCumber Tariff gave Presidents Warren Harding and Calvin
Coolidge the revenue to offset the slashing of Wilson's income taxes,
igniting that most dynamic of decades — the Roaring '20s.
That the Smoot-Hawley Tariff caused the Depression of the 1930s is a
New Deal myth in which America's schoolchildren have been indoctrinated
for decades.
The Depression began with the crash of the stock market in 1929, nine
months before Smoot-Hawley became law. The real villain: The Federal
Reserve, which failed to replenish that third of the money supply that
had been wiped out by thousands of bank failures.
Milton Friedman taught us that.
A tariff is a tax, but its purpose is not just to raise revenue but
to make a nation economically independent of others, and to bring its
citizens to rely upon each other rather than foreign entities.
The principle involved in a tariff is the same as that used by U.S.
colleges and universities that charge foreign students higher tuition
than their American counterparts.
What patriot would consign the economic independence of his country
to the "invisible hand" of Adam Smith in a system crafted by
intellectuals whose allegiance is to an ideology, not a people?
What great nation did free traders ever build?
Free trade is the policy of fading and failing powers, past their
prime. In the half-century following passage of the Corn Laws, the
British showed the folly of free trade.
They began the second half of the 19th century with an economy twice
that of the USA and ended it with an economy half of ours, and equaled
by a Germany, which had, under Bismarck, adopted what was known as the
American System.
Of the nations that have risen to economic preeminence in recent
centuries — the British before 1850, the United States between 1789 and
1914, post-war Japan, China in recent decades — how many did so through
free trade? None. All practiced economic nationalism.
The problem for President Trump?
Once a nation is hooked on the cheap goods that are the narcotic free
trade provides, it is rarely able to break free. The loss of its
economic independence is followed by the loss of its political
independence, the loss of its greatness and, ultimately, the loss of its
national identity.
Brexit was the strangled cry of a British people that had lost its independence and desperately wanted it back.
Patrick J. Buchanan is the author of "Nixon's White House Wars:
The Battles That Made and Broke a President and Divided America
Forever."
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