There is a trade imbalance with China.  Granted, the Chinese government subsidizes manufacturing so it can undercut our domestic production prices and take some manufacturing capacity.  That means we can buy products at lower prices.  A trade deficit actually denotes that we have a cost advantage.

Tariffs are paid by the consumer — in this case by American citizens who consume Chinese goods.  It is a tax.  In what alternate universe does hurting citizens, by increasing the cost, help citizens?

The latest justification for the president’s tariff wars is that tariffs will bring manufacturing back to the U.S.  Wishful thinking is not rational thinking.  There are better ways to accomplish this worthy goal: free-market competition. 

Consider why domestic manufacturing went offshore in the first place: Our own government agencies created a negative environment for private enterprise, and that forced business-owners to seek other modes of production.  Communist China created a bubble of capitalism and incentivized production there.  How incredibly ironic.

Our own government’s action created the need for offshore manufacturing:

- progressive taxation

- excessive regulation by bureaucrats 

- exorbitant spending by Congress causing crushing debt

Why would anyone think that more government interference (tariffs) would solve the problem?  This irrational thinking is what got us into trouble in the first place.

Government employees (bureaucrats) and business people in the private sector all make mistakes.  We are all human.  The difference between public-sector (government) and private-sector capitalism is that the private sector’s mistakes costs it its own capital.

Since their income is generated through taxation, federal employees don't have as much to lose, or gain.  Some people think there is an infinite source of tax dollars.  There is not, and the fact that we are arguing about foreign versus domestic manufacturing proves the point.

The road to increasing domestic production and manufacturing jobs is simple: Go back to limited government, to the Rule of Law.  And that rule is the Constitution.

Only by limiting our own government can we create the freedom from authoritarian rule for a true free-market system to work.  There is a place for both public and private.  Free enterprise can’t defend our nation from foreign aggression, but it can create jobs and profits far better than any federal agency.  Free markets are crushed under excessive government burdens like taxation and regulation.  Conversely, we citizens need a limited government to protect our borders.  We need balance between freedom and control.

Sustainable profitability is the free market’s superpower.  Capitalism is fully capable of creating opportunity.  And that opportunity is sustained by the most incredible outcome of fair trade: profitability.  Government agencies don’t create profit; they take from the citizens via taxation. 

Rather than tax citizens through tariffs, President Trump should continue his efforts (DOGE) to limit the federal government.  The private sector doesn’t need or want more government help.  We want to be left alone to live our lives and build our businesses.  Our ancestors left foreign lands and tyrants to live free.  That spirit still lives in us.

I recommend the analysis of Ayn Rand’s concept in American Thinker, here.

Jay Davidson is founder and CEO of a commercial bank.  He is a student of the Austrian School of Economics and a dedicated capitalist.  He believes there is a direct connection joining individual right and responsibility, our Constitution, capitalism, and the intent of our Creator.

Image: JSMed via Pixabay, Pixabay License.