OPINION:
More carrots, please!
Feeling flogged by sticks, Wall Street greeted President Trump’s “Liberation Day” with a bellowing Bronx cheer.
On Wednesday, Mr. Trump announced 10% across-the-board tariffs on all imports, plus reciprocal taxes tailored to foil foreign tariffs on U.S. goods. Financial markets opened Thursday and swiftly wilted.
After China slapped a retaliatory 34% tariff on American products early Friday, the key indexes dropped like bombs from a B-52. The Dow Jones Industrial Average tumbled 2,231 points (5.50%), the S&P 500 plunged 322 points (5.97%) and the Nasdaq plummeted 962 points (5.82%).
If the U.S. must absorb tariffs as long-run expenses rather than have Mr. Trump use them short-term to lean on foreign leaders, they should strike a vibrant, special economy. Instead, tariffs are smacking Americans still anemic from Bidenomics.
Nonetheless, Mr. Trump predicted Wednesday in the Rose Garden: “We will supercharge our domestic industrial base.” He pledged, “Jobs and factories will come roaring back into our country” and “more production at home.”
Hooray!
Where will companies find the cash to repatriate foreign assembly lines, expand domestic operations and otherwise reinvigorate U.S. manufacturing, especially after $6.6 trillion in market value evaporated Thursday and Friday?
Mr. Trump’s stick-heavy recipe lacks one key ingredient: carrots.
The all-American industrial renaissance that Mr. Trump rightly envisions would arrive sooner if lower taxes, instant amortization and other catalysts were humming within days, not whenever congressional Republicans get around to them.
From twisting arms on Capitol Hill to rallying taxpayers across America, Mr. Trump should push tax cuts as hard as he presses tariffs. Indeed, tax cuts should have come first.
What a pity that Mr. Trump did not promote these policies in reverse: First, slash taxes and let embattled American citizens and companies keep more of their money. A boom would have erupted promptly.
Second, as output soared, Mr. Trump should have invited world leaders to the White House and proposed 0% tariffs among these trade partners. If they agree, hallelujah! The world would enjoy pure free trade.
Third, if these countries had rebuffed Mr. Trump’s offer, he could have hurled reciprocal tariffs like lightning bolts from atop the moral highlands.
Instead, uncertainty remains the enemy of growth. This suggested timetable would have furnished answers, not burning questions: What tax rate will corporations pay after Jan. 1? How quickly may a factory amortize a brand-new boiler? Will Canadian aluminum prices include a 25%, 10% or 0% tariff?
As of the second quarter of the year, nobody knows.
Congressional Republicans appear to be coalescing around one big, beautiful bill brimming with permanently low Trump-45 tax rates, a new 15% corporate tax, down from 21%, for domestic manufacturers, and other vital reforms.
Alas, Republicans lack the urgency this moment demands. Senators, in particular, discuss tax cuts by Memorial Day or “later this year.” Others would postpone Mr. Trump’s repeal of taxes on tips, overtime and Social Security benefits until 2026.
This is dangerous.
These tax cuts should be passed and signed by May Day. Tax relief should take effect that morning, if not retroactively to Jan. 20 or even Jan. 1, 2025. At once, this would leave additional money in American wallets. Businesses would bloom among lower tax rates, more generous deductions and, ideally, immediate depreciation for factory construction and equipment.
A burgeoning economy would position Republicans to keep Congress. Republican dithering on tax reduction could delay prosperity and buoy Democrats’ midterm prospects.
Meanwhile, some Republicans reportedly are considering raising tax rates to 40% on $1 million-plus earners. It is abominable that any Republican would parrot Sen. Bernard Sanders’ chief talking point: Tax millionaires and billionaires good and hard.
Mr. Trump’s policy is an audacious wager.
Best-case scenario: Scores of nations mirror Israel’s and Vietnam’s ambitions to negotiate with Mr. Trump and set reciprocal tariffs at 0%.
Worst-case scenario: Trade War I explodes, and nations dig into financial trenches and attack one another with tariff gas.
Mr. President, let’s avoid that second destination.
More carrots, please!
• Deroy Murdock is a Manhattan-based Fox News contributor.
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