José Antonio Gurpegui
Director of the Instituto Franklin-UAH
The ideological principle that structurally underpinned Donald Trump’s speech at his inauguration was none other than defeating the enemies attacking the United States. He did not go so far as to identify them but did conclude by stating that “They will not conquer us. They will not intimidate us. They will not break us, and we will not fail. From this day forward the United States of America will be a free, sovereign, and independent nation.”
The first nominee for enemy was the cessationist government itself, “a radical and corrupt establishment has extracted power and wealth from our citizens [and] cannot manage even a simple crisis at home”; second, undocumented migrants “from prisons and mental institutions who have illegally entered our country from around the world”; and, third, those foreign nations that no longer respect their homeland.
Fortunately, he has measures to reverse the situation and “defeat the enemies of the United States”. On the first point, he has ordered members of his administration to “put in place the best means at their disposal to defeat what was record inflation and rapidly reduce costs and prices”; the remedy for the second will be to “declare a national emergency on our southern border. All illegal entry will be stopped immediately, and we will begin the process of returning millions and millions of criminal aliens to the places from whence they came”; and the third, finally ”we will tariff and tax foreign countries to enrich our citizens. To that end, we will create a foreign revenue service that will collect all tariffs, duties and revenues.”
In case anyone is concerned about the extent to which the apocalyptic picture that Trump draws in the United States is real, here are some data. Right now the unemployment rate is technically non-existent, with a percentage of just over 3% when in the COVID years it was well over 8%; the current GDP is over 30 trillion -always dollars-, 5 trillion more than just 2 years ago; inflation is under 3% when in 2022 it was 6.5%; exports increased by 2.7% reaching 275 trillion; the surplus in the services portfolio increased to over 25 trillion; banks are at record highs….
The answer would have to do, I understand, with the trade deficit in its balance of payments, which is estimated at 25 billion with respect to China, 20 billion with the European Union; 15 billion in the case of Mexico, and only 5 billion with Canada (Source: EFE News Agency). The bully policy that has been followed these two weeks with Denmark, Mexico, Panama, and Canada has paid off; it will be another thing when China occupies the other corner of the ring.
As for the tariff policy he intends to promote and the massive expulsion of immigrants without authorization of residence, they could destabilize the enviable economic panorama described. The most affected by this type of action could well be the North Americans themselves. Imposing tariffs does not mean lower prices, quite the contrary, and withdrawing labor from a labor market without unemployment would result in higher production costs. Both lead to inflation.
I doubt that Ronald Reagan, the architect of what has been American Republicanism until Trump and the president with the highest popularity ratings in the nation, would accept such postulates, since he made market freedom the epitome of his economic policy. So much so that many consider him to be the precursor and promoter of what would become the North American Free Trade Agreement, known as NAFTA, which Trump is torpedoing.
In any case, it remains to be seen to what extent the threats made will materialize. Trump may consider himself touched by the hand of divinity – “God saved me to make America great again” – but he is aware of the consequences of breaking alliances with traditional partners. So far, he has feinted but has not struck and some of his threats have been diluted only hours before they were substantiated.
I don’t know Trump’s level of historical knowledge about his own country, but it would be good if someone could remind him what the Hawley-Smoot Act of 1930, at the height of the Depression, was all about. In an attempt to reverse the status quo, this act imposed tariffs on 20,000 imported goods. The disaster for Americans was so great that one of President Roosevelt’s first acts after his election was to repeal such a disastrous piece of legislation in 1933. With friends like that, he didn’t need enemies.
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