RichardSaunders

Tariffs Can Work! When we talk about tariffs and protectionism, the standard argument offered by many people is that the U.S. cannot institute tariffs because foreign countries will retaliate and this would cause world trade to decline. This, in turn, would adversely affect economy of the US. There is also reference to the Great Depression stating that congress instituted tariffs and caused extension of the depression. Two things are different now: - After WW1, most European countries owed vast amounts of money to the United States. - Europe was receiving significant funds transfers by the sales of goods in the United States. When the U.S. instituted tariffs sales of European products declined and Europe did not have the funds to make payments on their U.S. loans. This caused cash flow problems for the U.S. banks and the U.S. government. The current situation in the U.S. is different than it was during the Great Depression. We are in debt to foreign countries and we are buying massive amounts of oil from them. This is causing a severe negative trade deficit. Until our trade deficit narrows we need to protect ourselves from the intense foreign competition by instituting tariffs that protect specific domestic manufacturing jobs. We also need to stop borrowing money from foreign countries and stop buying energy (oil) from overseas.