Every government entity needs money to operate, and that money has to come from somewhere. When the USA was founded in 1790, the primary source for supplying funds was from foreign tariffs. In fact, until 1913, tariffs supplied 80 percent of the federal revenue.

But supporting an army, navy, and marine corps when wars come around has a tendency to cost a lot of money. As the sabers were rattling in Europe for what would eventually be known as World War I, the United States government realized it needed to supplement the federal coffers. The introduction of the income tax came about with the passage of the 16th Amendment in 1913.

Tariffs were still used, of course, but what put tariffs deep in the dog house came with the Smoot-Hawley Tariff Act of 1930. It was designed to help relieve the pressure of what would later be known as the Great Depression, but ironically, it did exactly the opposite. The act raised tariffs on imports by an average of 20 percent, aiming to protect American farmers and manufacturers. What it did was result in a huge decline in international trade, which resulted in retaliatory tariffs from other nations. These ‘trade wars’ eventually brought a sharp drop in many countries’ GDP (Gross Domestic Product, a key indicator of a country’s economic health based on the measure of the total value of all goods and services produced in the country’s borders.)

But that was a century ago; today, the USA is paying off tariffs to the rest of the world. One hundred ninety-five countries put tariffs on American goods, and President Trump has proposed a universal 10 percent tariff on all goods coming in from other countries. So far, 112 countries have accepted the 10 for 10 percent tariff equality between each country. However, the other 83 countries have high tariffs and are not giving them up easily. China charges 67 percent to the USA’s 34 percent. Japan hits us up for 46 percent, whereas our tariff for them is 24 percent.

It is almost impossible to know what goes on inside Donald Trump’s brain, but there is almost always more than meets the eye in anything he is doing. President Trump has chosen to fight back against this inequity of global trade. And with his reputation, other countries are taking it seriously. Already, countries are trying to find the sweet spot of keeping their exports to the US market at the best rate they can get. The message came through loud and clear because, according to the White House, “virtually every country wants to negotiate.”

Every country is going to try to get the best deal possible in this, and I can see Trump playing them against one another. For example, if China does not play ball, the Japanese and Korean companies would be more than happy to manufacture the products that the Chinese had previously made. It is only the first inning in this ball game, but there could very well be some significant changes in the world economies as a result of this initiative.

The Democratic Party is screaming over President Trump’s tariff plan, of course because they have rejected every initiative that Trump has proposed. However, Trump’s attempt to balance the scales in international trade through tariffs has also been quite controversial for many influential people in his own party. Most of this angst is because of the shock it has brought to the stock market. Shock is not a strong enough word. Since mid-February, the US stock market has lost nearly $10 Trillion in value (that is not a misprint). JPMorgan economists now estimate the tariffs will result in this year’s GDP declining by 0.3%, down from an earlier estimate of 1.3% growth, and that the unemployment rate will climb to 5.3% from 4.2% now.

Yet, the number of countries that have approached the negotiating table to make tariff deals is already very significant. In the long run, this would tremendously increase manufacturing and business commerce in our country. It will take some time, but the markets will eventually reflect this, and there will be some equilibrium coming soon (we hope).

White House Press Secretary Caroline Leavitt recently spelled it out: “Our country has been one of the most open economies in the world… But too many foreign countries have their markets closed to our exports. This is fundamentally unfair. The lack of reciprocity contributes to our large and persistent annual trade deficit that’s gutted our industries and hollowed out key workforces. But those days of America being ripped off are over.”