E Keynes And Trump Tariffs

Keynes believed that tariffs work best if there is large unemployment. Certainly, in the USA, there are not a large amount of people out of work. And Trump has called for illegals, many of whom are working, to be immediately sent packing, which would reduce unofficial unemployment further. 

In the Great Depression, deflation was the wolf at the door. So, from the point of view of the great economist we read again from the article, Keynes and Protectionism:


With the backdrop of unrelentingly high rates of British unemployment in the 1920s, Keynes came to argue that import tariffs could help to boost aggregate output and employment. The younger Keynes would have agreed that tariffs could increase employment in protected sectors, but at the offsetting loss of employment in other (probably export) industries. Keynes now held that tariffs could expand total employment when all labor was not fully utilized.

John Maynard Keynes did not make the mistake of applying tariffs because the government devalued the currency before his policy was implemented. The current POTUS may make the mistake of applying tariffs as other nations devaluate which will limit their effectiveness. And, unlike in Keynes situation, without a suitable workforce to grow the economy (without importing workers), the timing of these tariffs could actually slow the economy, as the price to produce goes up. There could be nothing or little to show for it in economic and employment growth.

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Disclaimer: I have no financial interest in any companies or industries mentioned. I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice. The ...

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Moon Kil Woong 1 year ago Contributor's comment

Look to invest in technology and software which so far is free from tariff tiffs so far. There is already protections against foreign countries buying up key assets in the US if Trump hasn't noticed by now. Hopefully, the latest Washington junk will fade away. The tariffs on steel hurts US industries and our reputation enough already.

Gary Anderson 1 year ago Author's comment

The market has a lot on its plate, but adding the uncertainty of tariffs makes it tough for ceo's and investors alike. It is hard to feel sorry for those who supported Trump, but we have to face it, there were two very flawed candidates running for president.