Why 'Father of Economics' Adam Smith will be spinning in his grave as Donald Trump assumes office
“As Adam Smith observed, trade without tariffs makes people richer. The more trade, the more wealth. Tariffs impoverish everyone. They are a bad idea.” Dr Madsen Pirie, president of the Adam Smith Institute, neatly summed up the views of the Kirkcaldy-born ‘Father of Economics’ on tariffs in an article following Donald Trump’s election victory.
In the unlikely event that Smith was childish enough to have a least-favourite word, it might well have been ‘tariffs’. Unfortunately for the world, the soon-to-be leader of the world’s biggest economy has declared it to be his favourite and he appears determined to start throwing them up in defiance of well-established economic wisdom.
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Hide AdIt seems Donald Trump reckons the world should give 18th-century ‘mercantilism’ – characterised by protectionist policies, trade wars and real ones – another go. As an aside, the Encyclopaedia Britannica notes that this was “the economic counterpart of political absolutism”.


A risk to global economy
In its latest World Economic Outlook, the International Monetary Fund warns that the risks to the global economy include “an intensification of protectionist policies... in the form of a new wave of tariffs” which could “exacerbate trade tensions, lower investment, reduce market efficiency, distort trade flows, and... disrupt supply chains”.
It also said that while tax cuts and other measures in the US could “boost economic activity in the near term”, with positive benefits for growth worldwide, “in the longer run, this may require a larger fiscal policy adjustment that could become disruptive to markets and the economy, by potentially weakening the role of US Treasuries as the global safe asset...”
Of course, Trump is a self-proclaimed genius. No doubt, he will think that the IMF and other economists across the mainstream political spectrum have no idea what they are talking about.
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Hide AdOthers, however, offer a very different assessment of Trump’s intellect. For example, Rex Tillerson, the former chief executive of oil giant ExxonMobil who briefly served as Trump’s Secretary of State, reportedly described his boss as a “moron”.
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