By Ethan O’Malley

Elm Staff Writer

The Trump Presidency has been mired with scandals, tweets, and proclamations of being the best president to ever call the White House home. President Donald Trump has often pointed to the strength of the U.S. economy and job market to support his claim of being a superb commander-in-chief, but do any of us really know his economic philosophy?

Does Mr. President even know where he stands on economic issues? I contend that he does not, and his policies thus far have proven it.

President Trump markets himself as an ardent capitalist, the kind of politician who believes that the best approach to economic growth and sustainability is laissez faire — let business regulate itself and the economy will boom.

While he has put some of these beliefs into action via tax cuts and deregulation of both environmental and financial restrictions, his latest policy does the opposite.

As far back as the campaign trail, Trump suggested imposing tariffs on Chinese exports to the United States, arguing that a 45 percent tariff would give “American workers a level playing field.” Well, now we are seeing his ideas come to fruition with the recently imposed tariffs on Chinese imports and the debate surrounding NAFTA (the North American Free Trade Agreement).

What do these policies mean for you and me, and what do they show us about the President’s economic policy? Most significantly, tariffs will hurt the purchasing power of all American consumers, because it will raise the cost of a multitude of goods and services. When the factors of production cost more, producers are forced to charge more for their goods and services to maintain their profit margins. This not only puts unnecessary pressure on American businesses, it also causes an avoidable price increase, which hurts consumers.

At worst, a full-on trade war could cause U.S. workers to be laid off and simultaneously decrease wages due to the reduced demand for labor. While unlikely, this economic outcome is certainly a possibility if there is an escalation of tensions between the United States and China.

When President Trump states that he is protecting American workers by imposing tariffs and tearing up free trade agreements he is telling lies, whether knowingly or unknowingly, and it hurts the U.S. economy regardless.

The free market enthusiast cannot also harken back to the mercantilist belief that a trade surplus makes a nation better off. To clarify, mercantilism was the prevailing economic theory before Adam Smith’s “The Wealth of Nations,” written in 1776. Its core principle was that a nation would be better off if it exported more goods than it imported (a trade surplus).

If there is one thing to remember from this, remember that all parties benefit from trade. As trade has expanded and sped up globally we have seen tremendous economic growth worldwide.

President Trump does not have any reliable economic policy, and his conflicting ideas should leave us worried about future policy decisions that could lead the market to suffer another downturn.

The Elm

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