Trump's Tariffs Are Once Again A Wake-Up Call For The World! (A First Draft)
Tariffs Were Also A Global Wake-Up Call In 1971 When President Nixon Closed The Gold Window And Imposed A Ten-Percent Surchage On All Products Imported Into The United States
Some Perspective And A Little Bit Of History
I will provide bullet points for this section for ease of reading and for clarity.
Tariffs and excise taxes were used to generate revenues for federal finances through much of the 18th, 19th, and early 20th centuries.
The Sixteenth Amendment was added to the Constitution in February 1913. Later in that same year, the Revenue Act of 1913 was enacted. Personal income was taxed at 1% for income exceeding $3,000 and increased to 7% on incomes over $500,000. (Source: Wikipedia)
Individual income taxes, corporate taxes, and other taxes as well have been the largest source of federal finances since 1944.
Excise taxes still account for approximately 2% of federal finances.
America had a balance of trade surplus (exports exceeded imports) for much of its history. This surpluse turned into a balance of trade deficit sometime in the 1970s; that deficit increased to over a trillion dollars in 2021, which is the highest ever recorded.
President Nixon closed the gold window on August 15, 1971 to address the balance of trade deficit, as well as the outflow of gold requested by our trading partners who wanted gold in lieu of U.S. dollars.
President Nixon also imposed a ten-percent surtax on all goods imported into the United States. He stated in his speech to the nation on August 15, 1971 that this import tax was to be temporary in nature. These two actions alone were seen as quite disruptive by our trading partners, but other actions were also proposed by President Nixon in a comprehensive plan that affected domestic and foreign policy.
At the time (1971), two of America’s most important trading partners (West Germany and Japan) had many trade restrictions and practices that prevented the import of many American products into those countries.
In 2025, Japan, the European Union, and other trading partners as well continue to have extremely restrictive trade policies that disadvantage free trade.
America has never had a truly “free market system” because the centralized federal government began to place its finger on the scale in the early 20th Century and also intervened in market activities in ever more intrusive ways.
The trade restrictions mentioned above indicate that global trade has really never been a level playing field and America has always been disadvantaged as a result despite its economic power.
The Way Forward Is A Challenge
President Trump is basically using tariffs as a negotiating tool but the way forward is difficult because he has less than four years to make a difference. And, as with the deep state, our trading partners can stonewall him easily. Every nation will always act in their own best interests and this represents a negotiating challenge of the first magnitude. Trust will be the operative word for all these negotiations.
Another major challenge for President Trump is the world’s monetary system and the status of the U.S. Dollar as the world’s reserve currency. The solution for this challenge is for America to take a leadership role in calling for a new Bretton Woods-type gathering to consider options for a new monetary system that addresses all the shortcomings of the existing system. A quarter of the 21st Century is almost behind us and we have yet to address this critical world issue, which has become a “burning platform,” to borrow a phrase from offshore drilling in the oil industry.