Steve Forbes: Trump Must Offer 90-Day Tariff Moratorium To Any Nation Willing To Negotiate

2 days ago

Steve Forbes urges President Trump to offer a 90-day moratorium on tariffs to any nation willing to negotiate.

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Transcript

00:00Will the tariff shock send us into recession here and overseas?

00:09Hello, I'm Steve Forbes and this is What's Ahead, where you get the insights you need

00:13to better navigate these turbulent times. The damage of the sweeping tariffs put forth last

00:19week is not just higher prices. Perhaps even more harmful is the disruptions they pose to

00:25supply chains. We learned painfully from the pandemic that interruptions in the intricate,

00:31often complex processes that go into the production of goods and services cannot be

00:36quickly undone. It's not like turning a switch on and off. The disturbances to supply chains lead,

00:42at least for a period of time, to higher prices as well. The longer these tariffs stay in place,

00:48the longer will be the recovery time and the probability of a severe economic downturn.

00:54This is why President Trump must offer a 90-day tariff moratorium to any country or the European

01:01Union, a group of countries that wants to negotiate a deal and make the announcement as soon as possible.

01:08What is stunning markets is both the scope of the taxes announced last week and the weird,

01:14capricious way they are calculated. The average tariff rate for Taiwan is 2%,

01:1932%, yet it gets hit with a 32% tariff. Thanks to a previous free trade agreement with South Korea,

01:27most of our products get into that market tax-free, yet that country is slammed with a 25% tariff.

01:34Brazil imposes all sorts of non-tariff red tape barriers that make importing to that country very

01:41difficult. By contrast, Chile, where we have a free trade agreement, is whacked with the same tariff as

01:47Brazil. There is no rationale for such disparities. Making the whole thing even more absurd is that

01:55remote, insignificant areas of the world were subject to tariffs. The only inhabitants, for example, of the

02:01herd of McDonald Islands are penguins and seals. Yet we're imposing a 10% tariff. What President Trump's

02:09trade officials did was to take our trade deficit with the country and divide it by our imports from

02:15that country. For instance, with China last year, the deficit was $295 billion and our imports from

02:23China were $439 billion. Do the division and you get 67%. The actual average Chinese tariff was 24%.

02:33All this ignores actual trade barriers as we see with Brazil and other countries like it. It also has a

02:40critical ally like Japan, now subject to a 24% tariff, while our enemy Iran gets only 10%.

02:49The assumption is that any trade deficit with any country is bad. That a trade deficit is the

02:54equivalent of a company losing money. The assumption is profoundly wrong. A country's trade balance in and

03:02of itself is no indicator of its economic prowess. It only means we buy more from the rest of the world

03:09than it buys from us. A considerable part of our imports are component parts used by producers.

03:16The U.S. routinely ran trade deficits in the 1800s as we experienced rapid growth and became the most

03:23powerful industrial nation in the world. While we bought more than we sold to others, we are importing

03:29globs of capital to finance our extraordinary expansion. During our worst economic period in

03:35our history, during the Great Depression by contrast, we had trade surpluses. After the Reagan tax cuts

03:42and other reforms, the U.S. overall had great growth for almost 20 years, even though we had trade deficits.

03:49What really hurts manufacturers was our high taxes, which President Trump started to tackle in his first

03:56term tax cut bill and wants to do even more of in a new tax bill. And brutal, costly regulations.

04:03These started to be paired back in the first Trump administration and are now being vigorously

04:09attacked by Doge. Of course, unfair trade barriers must be attacked and that can be done without imposing

04:17global tariffs. What determines an economy's health is taxes, regulation, the size of government,

04:25and the soundness of its currency, not trade balances. The quicker these tariffs are suspended,

04:32the more likely we can avoid an economic disaster. I'm Steve Forbes. Thanks for listening. Do send in

04:38your comments and suggestions. I look forward to being with you soon again.

Steve Forbes: Trump Must Offer 90-Day Tariff Moratorium To Any Nation Willing To Negotiate

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