President Donald Trump delivered his acceptance speech on Monday, following his inauguration as our 47th President. It was an amazing speech, unlike anything in over the twenty some acceptance speeches previously given in the modern era. From vilification of the current administration to promise of future pipe dreams, it was a remarkable mixture of inconsistencies and impossibilities.
The thread throughout was to "Make America Great Again," taken directly from Trump's campaign slogan and ignoring the fact that our times are already significantly greater than any time in past memory. Unemployment is lower, incomes are higher, the stock market is up, businesses are booming, and bankruptcies are fewer than any time in current history. Trump's promises appear to ignore that he already had one chance at these issues and failed completely to deliver. The first two years of Biden's administration were largely spent in reversing and restoring the nation from what was left after Trump's first go from 2016 through 2020.
In one area of amazing new promises, Trump promised a detailed list of immediate increases in expenditures for various programs he was promising without any increases in taxes, explaining that the new programs would be financed through "outcome taxes" which he defined as being taxes and tariffs imposed on foreign sellers for goods and services provided to buyers in the United States. This is either a remarkable misunderstanding of the mechanisms of tariffs or a deliberate misstatement on who will be paying the intended increases.
Understand first that tariffs are taxes that are imposed on imports. They are ultimately paid by the users in the importing countries, not on the sellers in the exporting countries. In our case, they are paid by the United States importers who pass the tariffs on to the buyers. If a buyer in the U.S. purchases goods directly from the foreign seller, the tariffs are collected at the border by tariff stamps purchased or provided by the buyer. If purchased under contract, the foreign exporter may provide the import tax stamps for the shipments, but the cost will be on the buyer.
No part of the moneys received by the foreign sellers on the purchase price of good sold to buys in the U.S. are ever owed or paid to the United States government in the form of taxes or tariffs. The ultimate cost of any tax or tariff imposed is always on the buyer. It has been estimated that if general tariffs in the range of 20% were added to all foreign consumer products shipped to buyers in the United States, the annual cost increase to an average family of four could be over $4000. Widely imposed general tariffs were attempted in the 1930s with disastrous results that extended the impact of the depression by close to two years.
In another example, Trump promised relief in the price of gasoline, without acknowledging or even understanding that the price of gasoline is not regulated by any government action but is completely determined on the free market. Moreover, and most significant, it is the world market for petroleum and not the national market within the U.S. that determines current prices. Since in the U.S., all petroleum producers are currently at full production there in no governmental action available to Trump short of nationalization of facilities that would have any impact on current prices.
In a final example, Trump announced to great cheers that he was abandoning all programs to develop alternative fuels and return to a restored dependence on petroleum by abandoning the Paris climate change accords, reversing regulations on mining and non-fuel minerals, and rescinding climate clean energy programs. All these actions appear foolish in the face of undisputed evidence of atmosphere deterioration and potential fuel shortages. We face disastrous consequences if alternatives are not found for petroleum fuel sources.
These examples are only a few of the jaw-dropping revelations of Trumps proposals. His speech covered proposals never suggested before and some that have been tried and discarded. We can only wait and watch and see what happens.
Pay attention now. It promises to be a most interesting go.