The Markets Applaud Trump’s Reciprocal Tariffs

The markets applaud President Trump’s reciprocal tariffs.Today, Mr. Trump expanded on his fair and reciprocal trade policy that is aimed at creating a level playing field for working Americans and American businesses — and will hopefully deal with the many unfair trading practices around the globe that are aimed at the United States.He is using a simple metric: if you tax us, we’re going to tax you. But, if you lower your tax on us, then we’ll gladly lower our tax on you.Actually, Mr. Trump sees this as a road to free trade.And taxes are really tariffs. So, one place the President singled out was the European Union for their nearly 20 percent value added tax, which, yes, functions as a tariff.Plus, they have across the board tariffs that are much higher than ours. On that score, President Trump singled out the 10 percent European auto tariff, which is four times America’s 2.5 percent. That’s on top of the 20 percent VAT. Of course, that’s patently unfair.And there are country-wide examples galore: India has six times the tariff rates that we do, Mexico three times, China nearly five times, Brazil six times.The world trading system has been broken for over 25 years. And most countries have taken advantage of America by aiming their trading barriers at us.There is no international court to fix it. The World Trade Organization is a bust and is also corrupt, in bed with Communist China.So, Mr. Trump’s going to try and fix this by applying a reciprocal tariff benchmark. It seems like a fairly straightforward metric.At this point, we don’t know exactly how far the policy will go. Nor do we know how much in tariff revenues will be raised. These are important questions yet unanswered.In today’s presser, Mr. Trump used a very moderate, low-key approach. He wasn’t really bashing anybody, and he focused most of his remarks on how the industrial heartland and our whole economy will become bigger and more productive as a result of his reciprocity-based level playing field goal.The stock market rose nearly 400 points on the news. No actions will be taken until April 1st, after a review led by the incoming Commerce secretary, Howard Lutnick.Reporters keep nagging Mr. Trump about inflationary tariffs. But they are wrong.Foreign exporters will bear the largest burden, because they will be forced to cut their prices in order to sell in America. Plus, the export country currency will fall, while the U.S. dollar will rise.And, if the European Union — or whoever — lower their tariffs, our consumer prices will go down.That’s all counter inflationary.All that said, I strongly support trade reciprocity. It is a noble mission.Next up, I’d really like to see the President start talking up tax cuts, jobs, middle-class wages, and rapid economic growth.Let’s not forget the growth message.From Mr. Kudlow’s broadcast on Fox Business Network.

The Markets Applaud Trump’s Reciprocal Tariffs

The Markets Applaud Trump’s Reciprocal Tariffs

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