This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
One of the pressing dangers of a Donald Trump presidency is the prospect of his rhetoric becoming a reality in terms of trade policies and tariff increases to protect American manufacturers from predatory importers.
It's another example of Trump's "America first" applause line receiving thunderous approval from his adoring fans at rallies but has serious economists scratching their heads with concern over what policies could actually do to the economy.
Trump likes to talk about how stupid U.S. leaders are compared to foreign counterparts who, he says, are beating us in the trade game by underpricing U.S. products with their exports and luring American manufacturers overseas for the cheap labor.
His solution, which usually gets wild applause from supporters in this increasingly nationalistic and protectionist political environment, is to sharply raise tariffs on Chinese, Japanese and Mexican products.
Experts, however, say tariff hikes would hurt American consumers, especially the poor.
The tariffs would cost the average household $2,200 a year, or 4 percent of their after-tax income, according to a study from the non-profit National Foundation for American Policy conducted by David Tuerck, Paul Bachman and Frank Conte, all of Suffolk University.
The study uses the assumption that tariffs would increase by 45 percent for China and Japan and 35 percent on Mexico.
The authors say imports under Trump's policy would become more expensive, raising the price of competing American-made goods by 11 percent. That would effectively levy a consumption tax on purchases and cut into the incomes of shoppers.
"All of the benefits for producers would be extracted from consumers," said Tuerck, who heads the economics department at Suffolk.
The tariff hikes would likely cause a trade war, as history has shown, which would cause further damage.
"In a trade war, everybody loses. Some may lose more than others, but everybody loses," said Nicholas Lardy, senior fellow at the Peterson Institute for International Economics, who has been a vocal critic of China's trade and currency policies.
To be concerned about Trump's tariff-hike boasts, one just needs to look at U.S. economic history, centered on Utah's very own U.S. Sen. Reed Smoot, who served five terms from the turn of the 20th Century to the Great Depression of the early 1930s.
Banking on the same nationalistic and protectionist attitudes that arise today and have helped fuel Trump's path to the Republican nomination, Smoot co-sponsored the infamous Smoot-Hawley Act of 1930, along with Rep. Willis C. Hawley, R-Oregon.
Smoot was chairman of the Senate Finance Committee and Hawley chaired the House Ways and Means Committee.
In an effort to protect American manufacturers and farmers from foreign products undercutting domestic producers' costs, the Smoot-Hawley Act raised U.S. import tariffs on over 20,000 dutiable items to record levels.
That caused trading partners to increase tariffs on U.S. exports and drastically reduced world trade, hurting manufacturers in all the trading countries.
"Economists still agree that Smoot-Hawley and the ensuing tariff wars were highly counterproductive and contributed to the depth and length of the global depression," said Ben Bernanke, former chairman of the Federal Reserve System.
The scary thing is that Trump and many of his supporters don't seem to care much about historical precedent or proven consequences of certain policies as much as they do about nationalistic rhetoric and jingoistic hype.
There's an interesting chapter in the scenario of Reed Smoot's protectionist philosophies helping to destroy the world economy.
When the Smoot-Hawley Act was being debated, Sen. Bronson Cutting, R-New Mexico, proposed an amendment to the bill that would end the practice of having United States Customs censor allegedly obscene imported books.
Smoot was an apostle for The Church of Jesus Christ of Jesus Christ of Latter-day Saints who cared deeply about the effects of pornography and obscenity and the moral decay of American society.
He strenuously opposed the amendment, threatening to publicly read indecent passages of imported books on the Senate floor. He included "Lady Chatterley's Lover" as an example of an obscene book that must not reach domestic audiences.
The amendment failed but in 1959 the ban on three foreign books — "Lady Chatterly's Lover," "Tropic of Capricorn" and "Fanny Hill" — was overturned by U.S. Court of Appeals Judge Frederick van Pelt Bryan, whose ruling first established the standard of "redeeming social or literary value" as a defense against obscenity charges. —