LARRY KUDLOW: Trump Was Right About Tariffs

In case you didn’t see it, late Friday afternoon President Trump posted an op-ed piece on the Wall Street Journal website entitled: “My Tariffs Have Brought America Back,” and it appeared in the Saturday morning print edition. I don’t think people focused on it because everybody was talking about Mr. Trump’s superb nomination of Kevin Warsh to be Fed chairman. Yet it’s worth revisiting his piece, which is kind of a rebuttal to all the criticisms by the Wall Street Journal Editorial Board, regarding Mr. Trump’s tariff policies.

Anyway, the President makes a lot of important points. For one thing, he notes that there was never any retaliation against his tariffs, and therefore all the Smoot-Hawley 1930s talk turned out to be false alarms. Instead of retaliation, there were deals, and Mr. Trump points out deals with Communist China, Great Britain, the European Union, Japan, and a number of countries in Southeast Asia. Yet as he said, the deals reduced barriers for American exports, and may have well led to stock market booms, not only here in America, but in all the countries that came to the dealmaking table.

Meanwhile, I’ll just insert that Smoot-Hawley raised tariffs to 60 percent or 70 percent. Yet most of the effective Trump tariffs are really closer to 15 percent. And as the president points out, a couple of $100 billion in tariff-related revenues have helped lower the budget deficit by as much as 27 percent. American exports are way up, imports are lower, and the trade deficit has narrowed substantially.

Mr. Trump gives much of the credit for the economic boom to the One, Big, Beautiful Bill, regarding tax cuts, lighter regulation, and “Drill, Baby, Drill.” Yet his policy of trade reciprocity, really does look like a great success.

To quote Mr. Trump: “We have proven, decisively, that, properly applied, tariffs do not hurt growth — they promote growth and greatness, just as I said all along.” And he also cites a Harvard Business School study that foreign producers and non-American big corporations are paying at least 80 percent of the tariff costs. Very interesting. He also notes that the various trade deals prompted by the tariff tool are generating tremendous foreign investment in America.

Now, Mr. Trump likes to use $18 trillion. The official White House website says $9.6 trillion. Of course, he loves to embellish, and anyway, who’s to say he won’t get the commitments? And anyway, just getting half of it is remarkable.  

Another important point in his tariff piece was the use of the levies in international diplomacy, where trade diplomacy became an important national security tool. And this is something the pending Supreme Court decision hopefully will fully take into account.

Just today, Mr. Trump got an agreement from India to stop buying Russian oil, in return for which America will lower its tariff on India to 18 percent from 25 percent. Another interception of trade policy with foreign policy. All in, the Trump reciprocal tariffs have surely contributed to the Trumpian economic boom. And you know what folks? On another day I’m going to tell you why he’s really a free trader at heart.