President Trump, by his own declaration, loves tariffs. In fact, tariff is his “favorite word.” Tariffs purportedly produce funds, “billions and billions, more than anybody has ever seen before,” which can be used for essential spending or to reduce taxes and meanwhile will “bring back jobs.”
The president is all in on his enthusiasms. As matters now stand, he is imposing both universal baseline as well as country-specific tariffs, affecting more than $1 trillion of imports. This compares to the mere $380 billion in tariffs passed in 2018 and 2019 by the first Trump administration but will rise to $1.4 trillion when/if the temporary exemptions for Mexico and Canada expire in April.
There is a logic to tariffs which appeals to those with a protectionist bent. If foreign producers are selling in your country and taking profits which could otherwise be earned by domestic enterprises, why not make the cost of doing business higher for them and keep the profits at home?
Yet the history of tariffs is, to put it kindly, dismal. The 1930 Smoot-Harley tariff is America’s best known and most instructive experience with protectionism. In 1929, the League of Nations passed a resolution declaring that tariffs were destructive and should be ended by all. When Smoot-Hawley was introduced, Franklin Roosevelt campaigned against it. After the bill passed, 1,028 economists and even some business leaders like Henry Ford urged a veto.
President Hoover termed the measure “vicious, extortionate and obnoxious.” He signed it anyway at the urging of his advisors. Americans, especially the agricultural sector, were facing a perceived problem with overproduction, mainly due to electrification and other laborsaving innovations. Republicans generally agreed that prices were too low, and it would help pull us out of our economic slump if American producers were shielded from foreign competition.
Big mistake. Trading partners had warned of retaliation and indeed boycotts and reciprocal trading restrictions soon broke out. Canada, our most loyal trading partner, imposed tariffs on 30% of our products and formed closer economic ties to the British empire. France, Britain, and Germany all formed new trading alliances.
Yet initially, the medicine seemed to be working. Factory payrolls, construction contracts, and industrial production all profited from the reduced market competition.
But the loss of the inherent advantages of trading soon became clear. From 1929 to 1933, U.S. imports fell 66% and exports decreased 61%. World trade nearly ground to a halt, falling by two-thirds from 1929 to 1934.
Unemployment was about 8% when Smoot-Harley was enacted, but the promises to lower it further never panned out. The rate jumped to 16% in 1931 and 25% in 1932-33, falling back to pre-depression levels only during World War II.
Tariffs didn’t cause the Great Depression, but they clearly deepened and prolonged it. Without Smoot-Hawley, it might have just been another temporary recession, not much worse than many other economic downturns in our history.
The take-home message is that free trade is a voluntary interaction that reliably promotes prosperity, both in theory and in practice. It is a classic win-win for participants, in contrast to protectionism which is based on the principle that the stronger party wins by defeating the weaker one.
The 2018-19 tariffs imposed by Trump and expanded by the Biden administration proved the point once again, by reducing long-term GDP by 0.2% and resulting in the loss of 142,000 full-time equivalent jobs.
Still, Trump favors strength and domination, based on negotiations where he “holds the cards.” The lack of success last time has not dissuaded him from unleashing a barrage of tariffs with impositions, pauses, increases, suspensions, and escalations that have left producers around the world desperately scrambling to protect their businesses by anticipating his next move.
Trump is playing with fire here. If he does ignite a trade war that results in another downturn, he may find that the American economy is not as resilient as it once was. Decades of uncontrolled deficit spending have left us deeply in debt and without the reserves necessary to withstand much more fiscal abuse.
The lessons of history and the laws of economics are clear. Tariffs don’t work. Proceed with caution.
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
Imagine this: You invest a couple of hours towards watching “Juice: Power, Politics, and the Grid,” the excellent new documentary produced by Robert Bryce and Tyson Culver.
It’s a documentary that advocates for greater use of nuclear energy, but also has positive things to say about the need to continue using natural gas and coal to maintain stability in our energy grids. Or, you read the outstanding book by author Alex Epstein, “Fossil Future,” which advocates for the proposition that oil, natural gas, and coal will play significant roles in the global energy mix well into the future.
But then, you wake up the next morning only to find that these three men have been arrested and charged with the crime of, well, of saying nice things about fossil fuels.
Don’t laugh: If one Canadian member of parliament has his way, that will become law up in the Great White North. That MP, Charlie Angus of Timmins-James Bay, Ontario, introduced a bill Monday that would invoke criminal penalties for saying positive things about oil, natural gas, and coal, even when those things are manifestly true. The bill reads, in part, “It is prohibited for a person to promote a fossil fuel, a fossil fuel-related brand element or the production of a fossil fuel.”
The Toronto Sun reported this week that Angus made repeated promises to treat the oil, gas, and coal industries in the same way western governments went after the big tobacco companies in the 1990s. The liberal member of Justin Trudeau’s New Democrat Party claimed his bill was about stopping the spread of falsehoods about these fossil fuels, which the climate alarmist movement has done its best to turn into global boogeymen to which every environmental and weather ill is to be ascribed.
“The Big Tobacco moment has finally arrived for Big Oil. We need to put human health ahead of the lies of the oil sector,” Angus told the House on Monday.
So, Angus says the bill is about “stopping the spread of falsehoods by the oil industry,” but the bill actually says it is about making it a crime to “promote a fossil fuel, a fossil fuel-related brand element or the production of a fossil fuel.” The actual language in the law would make it a crime to advertise the price of gasoline on gas station billboards or for Chevron to run TV ads bragging about the additive it calls “Techron.”
The language in the bill would make it a crime for advocates like Bryce and Culver to produce their documentaries and for Epstein to publish his books. All these would be deemed illegal and indeed heretical to the doctrines of the climate alarm religion under Angus’s bill.
The actual language, in other words, has nothing to do with objective truth. It has to do with banning speech this Canadian MP doesn’t like.
For several years, the great standup comic Jeff Foxworthy hosted a TV show called, “Are You Smarter Than a 5th-Grader?” Obviously, MP Angus would flunk that show since every 5th-grader who ever appeared on it would immediately notice the logical conflict between the bill’s language and the promotion of it by its author.
The simple truth is that Bryce, Culver, Epstein and many other advocates who try to bring some level of sanity to our energy and climate debate are right about the future for fossil fuels and nuclear generation. Those energy sources currently supply roughly 85% of the primary energy mix, a level that has been intractably consistent for the past quarter century despite the spending of trillions of dollars on subsidies and tax breaks for wind, solar and electric vehicles.
Indeed, the nuclear renaissance advocated for by Bryce and Culver could even cause that percentage to rise in the coming decades.
Here’s a thought: Perhaps a better approach here would be for Canada’s Parliament and America’s congress to enact laws making it a crime for MPs or members of congress to spread falsehoods about the bills they’re trying to pass.
That would be a real public service, which of course means it can never happen.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
Arizona Legislators have an opportunity this week to meet and greet with a Canadian delegation.
On Monday, Arizona State Representative David Cook announced that the Delegate General of Québec in Los Angeles, Mr. David Brulotte, would be visiting Arizona on Wednesday. Cook, the Chairman of the Arizona House International Trade Committee, also revealed there would be other Canadian business leaders and organizations comprising the delegation to the state.
According to the lawmaker’s release, “the visit from the Canadian delegation is the result of the successful recent Trade and Foreign Direct Investment Mission to Canada, demonstrating a commitment to fostering strong economic ties between Arizona and Canada.”
“We are honored to welcome Delegate General David Brulotte to Arizona,” said Chairman Cook. “This visit marks a pivotal moment in our ongoing efforts to strengthen the economic relationship between our state and Canada. We look forward to productive discussions and collaborative initiatives that will benefit both regions. The Arizona House Committee on International Trade remains dedicated to fostering an environment that encourages trade, investment, and international collaboration, and looks forward to continued progress in strengthening these ties.”
The Vice Chairman of the Committee, Representative Justin Wilmeth also weighed in on the forthcoming visit, saying, “The Arizona House Committee on International Trade is committed to facilitating trade and financial investment opportunities. We believe that this meeting with Mr. Brulotte is an important step in achieving our shared goals of increased cooperation and economic growth. We are excited to work together to build a brighter future for both Arizona and Québec.”
Earlier this year, Cook led a delegation of Arizona House members on a trade mission to Canada, with the goal of “strengthening the longstanding ties between Arizona and Canada, further enhancing economic collaboration, and paving the way for increased foreign direct investment (FDI).” The legislative members who were announced to be attending this trip were International Trade Committee Chairman David Cook (R-7), Vice Chairman Justin Wilmeth (R-2), and committee members Tim Dunn (R-25), Melody Hernandez (D-8), and Mariana Sandoval (D-23). Representative Michael Carbone (R-25) was also expected to join the delegation.
The objectives for September’s Canadian trip included “engaging with the US Embassy in Ottawa for a comprehensive trade brief and fostering discussions with economic development organizations from the provinces of Ontario and Quebec, and with the Ontario Legislature and economic leaders to explore trade and investment prospects.”
In April 2023, the bipartisan House International Trade Committee unanimously adopted a plan “for conducting international trade” – a notable feat, considering the partisan nature of many efforts at the Legislature during the 2023 session. The Committee shared that its objectives were “to strengthen bilateral ties with existing international partners, attract more foreign direct investment to a booming Arizona and extend Arizona’s international reach for enhanced captured value to sustain a robust growing economy.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
Some business leaders have dreamt for years of an interstate that would traverse Arizona, providing a better connection for international trade through Nogales to Phoenix and Las Vegas, and in the process providing a north-south route between Canada and Mexico.
Las Vegas and Phoenix are the only two cities with population of more than 1 million residents which are not linked by a direct interstate route. That dream of new opportunities for trade, commerce, job growth, and economic competitiveness took a leap forward Tuesday when the Arizona Department of Transportation (ADOT) announced its preferred route for the state’s portion of Interstate 11 as it would be known.
Officially called the “Record of Decision and Final Preliminary Section 4(f) Evaluation,” the report released Nov. 16 was prepared by ADOT and the Federal Highway Administration (FHWA) in compliance with the National Environmental Policy Act. It represents the final step in the Tier 1 Environmental Impact Statement process, culminating five years of study, technical analysis, and stakeholder input.
The Record of Decision also includes proposed corridor, or route, for the 280 miles of I-11 that would run between Nogales and Wickenburg utilizing new and existing roadways. Another 200 miles of what is currently U.S. Highway 93 from Wickenburg to the Arizona / Nevada state line where 23 miles of I-11 begin its run in Nevada would also become part of I-11 after a series of upgrades. That section is not part of the Record of Decision.
The idea of a Canada to Mexico transportation route which would connect the two largest cities in Arizona and Nevada dates back 25 years. However, it was not until 2015 that Congress formally designated I-11 as an interstate highway in Arizona, although the designation came with no funding for design or construction.
Deciding where the new interstate would be located has presented a years-long challenge for ADOT and FHWA. While the route between Phoenix to Wickenburg was delineated early, there have been two potential routes considered for the Phoenix to Nogales segment. That was further narrowed down to utilizing I-10 from Phoenix for several miles until just north of Marana.
The Tier 1 environmental impact review then looked at two alternatives for reaching Nogales. One of those options took an easterly route by utilizing existing roadways of I-10 to I-19 to State Route 189.
A westerly option, which is the one recommended by ADOT and approved this week by FHWA, would require construction of a new roadway through Avra Valley and then down near Three Points before merging into I-19 in Sahuarita. More than 60 percent of the land near that route is currently vacant.
Previous concerns voiced by stakeholders in the Sahuarita area led to an adjustment of the westerly route before it was recommended this week. The town of Sahuarita has even designated more than 90 acres of vacant land that could be utilized for the merging of I-11 with I-19.
But the I-11 project in Arizona is a long way from ever breaking ground, if it even gets that far. The Tier 1 report released this week with its westerly option recommendation is only the beginning. Additional studies would be necessary, including a Tier 2 environmental review.
“It is during the Tier 2 process that the Selected Corridor Alternative would be narrowed to a maximum 400-foot-wide highway alignment, or route,” according to ADOT. “Based on need and purpose, these segments would focus on smaller and shorter sections of I-11 and not the entire 280-mile corridor.”
And as with the recent announcement of a preferred alternative route for theSonoran Corridor connecting Interstate 10 to Interstate 19, the I-11 project is unfunded.
“Currently there are no plans or funding available to initiate these Tier 2 studies,” ADOT confirmed.
Less than 23 miles of I-11 have been competed in Nevada, running from the Hoover Dam Bypass at the Arizona state line to Henderson, Nevada. The CEO of the Las Vegas Chamber of Commerce has called completion of I-11 one of the most critical projects for the Intermountain Western states.
For more information about I-11 and the Tier 1 Environmental Impact Statement, visit i11study.com/Arizona.
Arizona Congressman Paul Gosar joined his fellow Republican members of the Natural Resources Committee in urging President Biden to support American mining jobs. Gosar, Committee Ranking Member Bruce Westerman and other members of the Committee sent a letter to Biden calling on his administration to “stop selling out those mining jobs to Canada.
According to the Committee members, the Biden Administration has started an effort to meet with representatives from Canadian mining companies to arrange for Canadian mining to displace new American mines in the supply chain for critical minerals and new renewable technology manufacturing. The reports on the meetings highlighted “more-than 30 attendees at Thursday’s meeting who discussed ways Washington can help U.S. companies expand in Canada and overcome logistical challenges, according to the documents.” Additionally, an attendee at the meeting noted that the Commerce Department had not indicated whether they would provide monetary incentives to Canadian players in the mining sector, or to other companies in the supply chain.
Earlier this month, Rep. Gosar wrote an op-ed that highlighted this issue and the importance of critical minerals.
“It is unacceptable that this Administration is bartering the jobs of American miners, steelworkers, and laborers to Canada to make up for a decision it made killing thousands of American pipefitting and welding jobs. American miners and American mineral security should not be used as a trading tool to make up for Mr. Biden’s disastrous foreign policy decisions. The Biden Administration, beholden to radical environmentalists, is shutting down domestic mining while holding secret meetings with Canadian mining companies about opening new mines in Canada,” said Gosar.
“Meanwhile, House Natural Resource Committee Democrats are attempting to undo a bipartisan, bicameral agreement to develop one of the largest copper and tellurium mines in the United States. Our nation has been blessed with tremendous resources, the strongest environmental protections and the best workforce. The Biden Administration and House Democrats should support these good jobs, not pass along those benefits to foreign nations,” argued Gosar.
That this Administration, through the Department of Commerce, is working to trade the jobs of American miners, steelworkers, and laborers to Canada to make up for a decision you made that killed thousands of American pipefitting and welding jobs and tens of thousands of Canadian oil and gas jobs is unacceptable. American miners and American mineral security should not be used as tools to be traded away to make up for your disastrous foreign policy decisions. American mining and smelting jobs are some of the highest paying jobs in our nation and your Administration should be fighting to create more of these jobs domestically, not using taxpayer resources to encourage Canada to steal our jobs and the opportunity they present to America. It makes no sense to actively kill mining jobs in Minnesota, Arizona, and Alaska while turning to Canada and asking them to open mines to fill the gaps. READ THE FULL LETTER HERE
“America leads the world in clean, safe mining. We should keep it that way. While our Democrat colleagues attempt to ban, prohibit and regulate the mining and energy industries into oblivion, we want to incentivize new innovation and more jobs right here at home. There’s no reason to outsource our mining needs overseas, where we have no control over environmental standards. American workers deserve better,” said Westerman.
“President Biden supports Canadians mining just miles from my district and in our very same watershed. Why are Canadians allowed to have high-wage, high-quality jobs, but Democrats oppose jobs within our borders? We have America’s domestic mineral needs in Minnesota, Arizona, and throughout the country. Let’s do it here with our workers earning high wages for their families and providing funding to our schools and communities,” said Rep. Pete Stauber.
Rep. Lauren Boebert stated, “I’m disappointed but not surprised at the Biden administration’s efforts to destroy America’s mining industry. Biden’s America last policies take jobs away from American workers, hurt rural communities, and decimate our economy while strengthening China’s. The Green New Deal and Biden’s environmental schemes would require a large amount of mining and minerals. Democrats have repeatedly made clear they would rather have children mining with their bare hands in the Congo and other countries than good and safe jobs in America.”
“The Administration policy to increase demand for minerals and then export the mining jobs needed to produce those minerals is another example of President Biden snubbing America’s working families, trashing the global environment and decreasing energy security. In order to power America’s clean energy future, we must fully utilize our own domestic supply of critical minerals and put Americans to work to do so. Our national security and economic prosperity depend on us advancing smart policies that promote American labor and American resources, not increasing U.S. reliance on foreign adversaries with abysmal environmental records – like China – for such vital resources,” said Rep. Garret Graves.
