Love’s famously blind, but generally speaking, people know a lot about the things they love.
Love’s conducive to obsession, in many cases unhealthy obsession, and being obsessed with something typically means knowing as much about whatever it is as absolutely possible.
Donald Trump loves tariffs. As Bloomberg hilariously put it on Saturday, “Trump is no stranger to tariffs though his admiration for them has reached new heights.”
That admiration absolutely manifests as obsession. If you let Trump talk for more than a minute, maybe two, he’ll almost invariably bring up tariffs, even when there’s no context.
Trump’s penchant for putting tariffs at the center of nearly every discussion stems from his conceptualization of trade levies as a cure-all which, in turn, can be traced to his perception of import duties as a tax on the sender.
But that’s not what tariffs are. Tariffs are a tax on imports, not on exporters. Ultimately, consumers pay that tax in the form of higher prices. It’s just free trade in reverse.
Note that if a country has to produce, domestically, everything its citizens need and want, the overall price and quality of goods and services will be higher and lower, respectively, than it would be if that country engaged in free and open trade.
In the simplest terms: Free trade allows humanity to maximize the benefits of specialization. Specialization’s foundational. To erect trade barriers is to set the stage for de-specialization. No one wants that. It’s tantamount to developmental backsliding.
On some days, and at some level, Trump surely understands all of that. But I think he assumes (not irrationally) that considering i) America’s self-sufficiency and partial self-sufficiency in producing and providing for pretty much everything the country needs, and ii) the fact that in the year 2025, a trade war isn’t going to result in the complete, overnight cessation of global commerce, let alone widespread deprivation, his critics are trafficking in overwrought fear-mongering for the sake of principle and ideology, not well-reasoned analysis to protect Americans from poor economic outcomes.
If that is indeed how Trump’s thinking about tariffs and the broader debate around trade policy, he’s not wrong. And if he can extract meaningful concessions from strategic adversaries (where in this context that just means China) by threatening to upend trade relationships, or if he can tailor tariffs in such a way that indulging his protectionist proclivities results somehow in a net economic gain for the US economy, then great. By all means, “Tariff Man.”
But on other days, and at the superficial level (where Trump’s “very large brain” operates most of the time), America’s would-be strongman seems to actually believe that the revenue collected by Treasury in connection with tariffs is a free lunch. And he’s convinced millions of Americans of the same.
Of course, there’s no such thing as a free lunch. (Ironically, free trade’s probably the closest thing.) It’s true that there are costs for America’s trade partners in a trade war with Trump. Otherwise, they wouldn’t get so bent of shape about his threats. But those costs aren’t a check made out to the US Treasury.
To understand the nature of the costs to trade partners from Trump’s tariffs is to delve deeply into the issue on a country-by-country basis, and also to consider all the myriad ways other countries can go about mitigating those costs. Trump hasn’t done that. Or not personally, anyway.
Coming full circle, someone who loves tariffs as much as Trump should’ve done the work to understand them inside and out. Anyone who’s done that work and isn’t completely dishonest (and maybe that’s where the problem resides), will at the very least concede that the case for tariffs isn’t clear-cut. And that it’s entirely possible (where that means more likely than not) that Americans will, on net (note the emphasis), end up worse off by adopting a protectionist trade agenda.
25% of imports from Canada is about $110BN, 25% on imports from Mexico is about $121BN, 10% on imports from China is about $46BN. Totals about 1% of US GDP.
You know those calculations are not done that way.
Why not?
At a first approximation, that is the price increase that has to be absorbed, in margin, inflation, or demand destruction.
Oh come on John… as our Dear Leader has pointed out, there are many US producers of fruits and vegetables eager and anxious to replace Mexican products once tariffs eliminate their need to hire expensive & lazy illegal farm workers. And I know for a fact that Hormel already produces very fine “Canadian” bacon. Our Egg McMuffins will still be available!
It is inconvenient that large numbers of our farmworkers are not showing up for work for fear of La Migra, and not many (any) MAGA voters are turning up to replace them.
Well put.
H-Man, the tariff trigger has now been pulled – Alea Jacta Est. Tariffs=higher inflation=Fed raises rates= a giant mess.
You are much too kind to Trump. All the readers of your analyses are smart enough to write books on the ‘net negatives’ of tariffs. There are so many that have been researched for decades and the nature of the modern U.S. unequal, consumption-driven society makes them much worse for the bottom 80% of the populace. The governments own numbers show the tax cut extension costs 4.6 trillion while the tariffs gain 2.3 trillion over 10 years. Give to the rich in the U.S. and punish most while slowing the global economy by making the U,S. less reachable. The only thing tariffs are good for is making us more self sufficient in preparation for war and extreme global disruption. God help us. Please protect us from these cruel misconceptions.
That’s similar to how I view the tariff plan. The wealthy Republican right has long been in favor of a regressive flat tax but could never push it through Congress. Income tax cuts are popular and easy to get through, so Trump has figured out how to replace the progressive income tax with the regressive sales tax through tariffs without needing the consent of Congress. The great irony of course is that the people who will be most hurt are cheering for him to do it to them.
There’s a power that comes with being able to pick and choose the favored industries protected with tariffs. It’s a great way to benefit select small groups of interest while spreading the pain broadly so that it’s hardly noticed by his base that pays the price. They’ll blame Biden and DEI anyway.
I thought congress represented the popular will of the people. What a quaint thought.
Tarrifs can be reversed. But, I am not sure the damage from Elon Musk’s getting access to the US Treasury system can ever be undone.
Where is Congress?
Yeah, I’m not sure yet how big of a deal that is. I mean, plainly it’s a big deal from a “Musk as an uber-oligarch” perspective and there’s obviously a lot that’s terrifying about giving him to the keys to a data Shangri-La, but the question is what’s he actually going to do in there? If the point is, “Well, it’s a Pandora’s box, and on too many vectors to count, and maybe a national security concern too” then yes, it’s unfathomably dangerous. If the point is, “Elon’s going to selectively stop sending out social security checks to registered Democrats, or, Elon’s going to usurp Scott Bessent and stop paying America’s bills if Mike Johnson caves to Democrats and GOP moderates in budget discussions,” then I’d have to say “No, that’s not going to happen.”
If it is as you say … Why does he want the keys? Why does he lock out the federal employees as well?
Does not make sense unless …
If he is not going to do something illegal, immoral or just plain evil, why take control?
I was very reassured to read that Scott Bessent was the one who stepped in to approve Musk’s access. It’s nice to see the “adult in the room” stepping up.
Perhaps he is worried he’ll be dismissed as part of the president’s anti-DEI campaign?
I have no clue what massive amount of data can be gleaned from Treasury access or what it might even contain, but Musk is already bringing in young data geeks to ‘have at it.’ Isn’t data the new gold? Musk bought this stash, so it’s his.
“Trump will fix it”
For whatever reason, this piece of propaganda keeps popping into my head every time I read about another terrible decision he’s made.
“If it ain’t broke, fix it till it is.”
The response to that slogan that my brain keeps producing.
When I was in the Navy long ago, we used to say this about performing preventative maintenance on equipment that was working just fine. Occasionally, as a result of that maintenance, the equipment would break. We’d then be working overtime to undo the fixing we did.
The economy wasn’t broken last year when Trump campaigned on the lie that it was. I think even the most uninformed must realize that by now given that a month after the election most people reported that they were better off than they were 5 years before. But Trump IS fixing that, he’s going to implement ever escalating tariffs until not only the US economy is broken but maybe even the entire global economy.
Reports are Donnie has said, ‘There could be some pain (from tariffs).’
Therefore be ready for some pain, maybe the only free lunch is no lunch.
Trump thinks we are suckers. He’s right, because the majority voted for him.
But there’s a difference between being suckered, enjoying it, and coming back for more.
Or did a majority vote for him? Did they cheat?