Scott Bessent: Let's talk about tariffs. It's time to bring back Alexander Hamilton's favorite tool

For months, economic commentators have been parroting the Harris campaign's misleading argument that the tariffs are a “sales tax.” This view, like the conventional wisdom of many economists, is fundamentally wrong. Reflexive opposition to tariffs is not considered economic ideology, but represents political ideology and advocacy.

The truth is that tariffs have a long and storied history as a revenue-raising tool and a way to protect America's strategically important industries. President-elect Trump added a third element: tariffs as a trade negotiation tool. partner.

Prior to the enactment of the 16th Amendment, which authorized a personal income tax, tariffs were one of the major sources of funding for the federal government. Alexander Hamilton, the first Secretary of the Treasury, also happened to be America's original tariff advocate. However, after World War II, an agreement was formed centered on multilateral tariff elimination. The promise of this new free trade agreement was that the economic disruption caused by globalization would be offset by increased prosperity for all. Particularly in the United States, this conviction was accompanied by a belief that free trade would lead to political freedom in other countries, such as communist China. Neither of these predictions has proven correct.

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The United States opened its markets to the rest of the world, but China's resulting economic growth only solidified the grip of the autocratic regime. In the meantime, we have hollowed out our manufacturing base and left a trail of devastation across large swathes of our nation's heartlands. It also created significant national security vulnerabilities. The truth is that other countries have taken advantage of America's openness for too long because we allowed it. Tariffs are a way to finally stand up for Americans.

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Tariffs are also a useful tool for achieving the president's foreign policy goals. Whether it's forcing allies to spend more on their defense, opening up foreign markets to U.S. exports, ensuring cooperation in combating illegal immigration and fentanyl trafficking, or deterring military aggression, tariffs are central. can play a role.

Finally, tariffs can significantly increase revenue. Last year, we imported approximately $3.1 trillion worth of goods. We are the world's largest importer and therefore the single most important market for other countries' exports. Our scale gives us market power and the ability to dictate terms. Other countries need us more than we need them. We have no choice but to use that power.

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Critics of the tariffs say they will increase the prices Americans pay for imported goods. This, as ridiculous as it has become, was the Harris campaign's “sales tax” argument. However, the facts contradict this. President Trump's first round of tariffs did not increase the prices of affected goods, despite predictions at the time that the tariffs would cause inflation. In fact, not only was there no appreciable rise in inflation during the last tariff policy, the Fed's recommended inflation measure actually fell.

Strategic use of tariffs can generate more revenue for the Treasury, encourage companies to recover production, and reduce dependence on industrial production from strategic rivals.

For too long, conventional wisdom has rejected the use of tariffs as both an economic and foreign policy tool. But like Alexander Hamilton, we should not be afraid to use the power of tariffs to improve the lives of American families and businesses.

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