Tariffs: Good, Bad, Or Indifferent?

The hell if I know!

But the volume of nonsense coming from people who can't balance a checkbook and don't understand even the most basic economic laws is getting hard to tolerate. Of course, some of it is reflexive Trump-Hate, and some of it is typical Democrat resistance to anything a Republican does.

It is important to separate the geopolitical effects of tariffs from the straight economic effects. Those economic effects are immensely complicated, and back-of-the-envelope analyses from journalism majors is of limited utility.

Tariffs and market share do not have a one-to-one correspondence. For instance, if we place a 10% tariff on assless chaps from Canada, that doesn't necessarily mean a 10% reduction in domestic demand for that product. They might be the best assless chaps in the world and are highly sought after, so the reduction in demand might be much smaller than 10% (inelastic demand). Or they may be the worst assless chaps available, in which case an 10% increase in their price might destroy their market share (elastic demand). Will domestic manufacturers of assless chaps pick up that demand? Probably, but maybe Croatian assless chaps are also quite good, and they get some of the demand.

The point is that economic changes are not static. There are millions of individual decisions that go into into economic activity (Adam Smith's "Invisible Hand"), and they change every day, so trying to predict outcomes is an exercise in futility.

What is more important in the long term is the profound change in our trade policy. Gone (I hope) are the days of free trade for our "trading partners" and regulated trade for us. Take a look at the graphic and you will see some startling disparities, and that is even after the U.S. tariffs are increased!

Obviously this chart is incomplete, and leaves lots of questions, including how "currency manipulation and trade barriers" is calculated. And...Average tariffs on all products? Highest tariffs? Are the tariffs weighted by trade value? But President Trump's strategy is already showing some success. Mexico is negotiating; Israel has cut all tariffs to zero; India and Vietnam are considering cutting tariffs.

[click for a larger version]

It is incumbent upon government to protect vital industries, regardless of whether they are efficient. We need a significant steel industry, and it doesn't really matter that South Korea or China or India can make steel more cheaply. It is a national security issue. We need a significant agricultural industry so that we can feed ourselves! We need significant domestic production of chips and other computer technology. The list goes on and on, and while it would be nice if they are the most efficient and best in the world (and some are!), that is secondary to being able to produce those products in times of need.

Switzerland famously subsidizes its farmers to the tune of almost $2,000/per person (not per farmer!), and that makes sense. Why should Switzerland be at the mercy of the whims of the rest of Europe? They want to be able to feed themselves. But should that be at the expense of America? 137% tariff on dairy products?

And just like that... countries are lining up to negotiate more reasonable trade.!

BREAKING: Economic Council Director Kevin Hassett just announced that over 50 countries have already reached out to begin negotiations following President Trump's new tariff policies:

"I got a report from the USDR last night that more than 50 countries have reached out to the� pic.twitter.com/6TFPfyH3mr

— Charlie Kirk (@charliekirk11) April 6, 2025

The goal of President Trump's tariffs is to drive manufacturing back to America, and stop the funding of foreign economies by American consumers. Increasing the cost of imports will push demand to domestic production. That's basic economics. Can it be done without economic dislocation in the world markets and the accompanying possibility of recession? Maybe... Maybe not. But if, at the end we get a revitalized American economy with more manufacturing and a more equitable trade system, the the short-term pain will be worth it.

Nobody knows how this is going to progress, because no major country has shifted its trade policies so comprehensively and so quickly. And the 20-something journalism majors who confidently write about this complex economic and geopolitical issue can be ignored. They simply don't have any idea what the f*ck they are writing.

Are there rational criticisms of President Trump? Absolutely.

I think his communication with the American people has been lacking. I hope that in the near future he lays out his plans, explains the potential downside, and more importantly explains the tremendous upside of an all-encompassing trade policy that favors America over all other nations. That means more good jobs, more domestic product demand, more tax revenue for the Leviathan, and an American economy that is insulated from the depredations of foreign governments that absolutely do not have the best interests of America in mind.

[Crossposted at CutJibNewsletter and X/Twitter] And the Apple and Spotify feeds for CJN's podcast should be working!

posted by CBD at 12:00 PM

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