Of tariffs and protectionism

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BY JED JALECO DEL ROSARIO
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Sunday, March 18, 2018
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SHORTLY after conclusion of World War 2, the United States opened up its market to Asia and Europe. This was done for primarily political reasons. With the economies of Europe and Asia in tatters, communism and socialism (and by extension America’s main competitor, the Soviet Union) were on the rise.

To prevent socialist and communist parties from gaining power in Europe and Asia, the United States had to help their devastated allies repair their economies as quickly as possible. To achieve this goal, the United States developed the Bretton Woods system, which allowed the United States to control the global economic order at that time by (among other things) opening up its market to its allied nations.

In this case, “open” means having little to no foreign tariffs on goods and services.

This sort of thing went on for the next few decades, and over time, the United States working class suffered for it. Wages stagnated and manufacturing jobs went overseas, mainly to Asia. This was also the situation which allowed the Asian economic growth model to flourish, namely rapid and targeted investment plus low wages to stimulate fast growth.

As the free trade dogma became more and more entrenched, the post-war United States developed a myth about itself as the main driver of free trade and open markets in the world, a myth that would survive to this present day. The truth, however, is that the United States has a very long history with tariffs. In fact, the first major act passed in the United States was the Tariff Act of 1789. So the myth that United States stands for free trade is just that, a myth.

Fast forward to 2018 and United States President Donald Trump is putting together tariffs on steel and aluminum. He’s doing this because it benefits his voter base, working class people in the so-called “Rust Belt” in the United States. These new protective, anti-free trade measures are not only destroying the free trade dogma, they are also breaking the post-war consensus, which should have ended when the Soviet Union fell.

Under Trump, the United States is voluntarily breaking up Pax Americana, and ushering in a new period of Post-Globalist Nationalism. Some political analysts believe that countries, like China the EU or even Russia might step into the vacuum left behind by the United States, but these countries will need to assume the same role that the US has occupied for decades, that is to say they will have to open up their markets and undercut their working classes. Somehow, I doubt that either China or Russia will be willing to do that.

For now, though, the United States – under Trump – is continuing to close its doors, reverting back to its more isolationist roots. This is the context that should be used when examining the trends going on in the United States right now. The United States is ending its participation in the globalist, universal rights experiment.

Because at the end of the day, no country wants to be the one to pay the costs of limitless free-trade and globalization. (jdr456@gmail.com/PN)
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