The whole world is talking about the many tariffs that President Donald Trump has imposed and is about to impose on various countries around the globe. That is by the way something that he promised he would do on several occasions before he was elected to the highest office in the United States. The leaders of different countries seem not to have believed a word from what President Donald Trump said he would do. They didn’t believe it because they themselves are in the habit of promising things and not delivering on them, not even thinking of delivering on them. This time they have been confronted with a politician who keeps his word, and that comes as a surprise.
President Donald Trump believes in the benefit of tariffs, that is to say he believes that restrictions on international trade, restrictions on the amount and number of goods imported to the United States are beneficial for American economy. Imposing tariffs he must have reckoned with retaliation, which, indeed, is being applied. In other words, President Donald Trump must also believe in the beneficial effects for American economy of the limited exports. To put it otherwise, President Donald Trump is well aware of the fact that his sanctions seal American economy off from the economies of other countries, and yet he also believes that it is good for the United States.
Since tariffs and the retaliatory measures limit or make impossible exports and imports, they are no different from… sanctions. Sanctions are sort of tariffs: a country that is at the receiving end of sanctions cannot export or import as much as it wishes. The result is the same, or is it? Now President Donald Trump may have believed in the beneficial effects of tariffs a long time ago, but it is also possible that he realized the beneficial effects of tariffs (or his long-standing belief was reinforced) as he observed what happened to the Russian Federation since sanctions were imposed on it. Russian economy not only did not collapse, but seems to have developed its potential.
Just as the Western economists have prophesied that the Russian Federation was just about to collapse due to the thousands of sanctions directed against its economy, so are they now prophesying that President Donald Trump has overreached his hand and rather than helping the United States is going to do it enormous harm. Time will show. Still, the similarity of the economic effect that tariffs and sanctions appear to have is striking. Two labels denoting two seemingly different economic policies and apparently the same result.
Then what’s so basically wrong with the tariffs which the American president is so enarmoured of? Does the European Union not separate itself from the rest of the world by means of tariffs? Does the EU not rely on tariffs to defend its economy against that of China? Why then are so many economists critical of America-imposed tariffs while they remain silent when it comes to the EU-imposed tariffs or – for that matter – sanctions?
It’s interesting to observe that all that glib talk about free trade, free market, free flow of capital, free flow of goods and services, all that glib talk is just another weapon in the arsenal of the powers that be. If they can turn free trade and free flow of goods and services to their advantage, then they are all in favour of it and they go to great lengths to impress it on others how beneficial it is for all players on the world’s stage. The moment, however, free trade and free flow of goods and services does not serve their purposes, they strike a different note. What yesterday was considered economically good, today is considered economically bad. Sure enough, an explanation or a string of explanations is offered and the consumers of information usually buy into such explanations.
Tariffs and sanctions are two sides of the same coin. President Donald Trump has effectively imposed sanctions in the European Union; conversely, one might say, the European Union has been imposing tariffs on the Russian Federation. The result? Russian economy has emerged victorious, and so will American economy emerge victorious. That’s at least the logic of this economic mechanism of separation or protection of one’s own market, of one’s own entrepreneurs and customers (economic protectionism). Economic protectionism is nothing new in the history of mankind. In point of fact, there were periods during which protectionism was the order of the day, and periods during which it was denounced, as the case may be.
Besides, the application of tariffs by the United States clearly shows that the country’s economy has long ceased to be dominant or else why would Washington use this means in the first place?
