Some Tariff Related Content

by dap | Apr 4, 2025 | National Review, Outside The Beltway

If things go as expected, later today, President Trump will be unilaterally enacting a huge regressive tax increase on the American public. I realize that some galaxy brains will claim that other countries pay for tariffs–not American citizens. This is, off course, utter bullshit. But you don’t need to take my word for it. Here is a noted economist on the topic:

Tariffs are taxes on imports which serve to raise the prices of those imports, and thus enable domestic producers to charge higher prices for competing products than they could in the face of cheaper foreign competition. . . .

Sometimes this approach is buttressed by claims that this or that foreign country is being “unfair” in its restrictions on imports from the United States. But the sad fact is that virtually all countries impose “unfair” restrictions on imports, usually in response to internal special interests. However, here as elsewhere, choices can only be made among alternatives actually available. Other countries’ restrictions deprive both them and us of some of the benefits of international trade. If we do the same in response, it will deprive both of us of still more benefits. If we let them “get away with it,” this will minimize the losses of both sides. [Source ]

That is a quote from Basic Economics: A Common Sense Guide to the Economy by famed conservative economist Thomas Sowell (who knew he wrote on more than the failures of academia and black culture). An earlier National Review article excerpted several portions of the work relevant to tariffs.

Now I realize that some readers must be thinking: “But something needs to be done with China, and therefore we should impose tariffs as a radical solution. The fact is we know what the economic impact of this will most likely be–because Trump has already done it. Again, I’ll go back to Sowell, this time from a Reason interview :

Thoughts on the Trump trade war?

Oh my gosh, an utter disaster. I happen to believe that the Smoot-Hawley tariffs had more to do with setting off the great depression of the ’30s than the stock market crash. Unemployment never reached double digits in any of the 12 months that followed the crash of October 1929, but it hit double digits within six months of passage of Smoot-Hawley, and stayed there for a decade.

What about the view by President Trump that other countries are ripping us off by running trade surpluses?

It’s pathetic. The very phrase “trade surpluses” gives half a story. There are countries that supply mainly goods, physical goods, and there are other things like services that other countries provide, and the United States gets a lot of money from providing services. To talk about one part of the trading and ignore the other part fails to understand that money is money no matter whether it’s from goods or services.

When you set off a trade war, like any other war, you have no idea how that’s going to end. You’re going to be blindsided by all kinds of consequences. You do not make America great again by raising the price to Americans, which is what a tariff does. [source ]

Then there’s always this guy, who also had strong thoughts on tariffs:

All this matters because, by most estimates, the tariffs that are about to be enacted will represent the largest peacetime tax increase in American history–to the tune of $600 billion a year on the American People. That is, unless you are Peter Navaro who claims that tariffs are actually a tax cut . It’s good to know that Professor Sowell would most likely fail one of the President’s current economic advisors. Estimates put the impact on average households as high as $3,400 :

In the analysis released by the policy research center this week, the group found that a 20-percent tariff on all imports would bring the average effective U.S. tariff rate to the highest since 1872 when stacked together with the other tariffs that have taken effect in recent months.

Researchers said the proposal would increase prices somewhere between 2.1 percent and 2.6 percent, depending on how other countries retaliate to Trump’s new tariffs and the Federal Reserve’s response.

“This is equivalent to a loss of purchasing power of $3,400-4,200 per household on average in 2024 dollars,” the group said. [source ]

That’s before we get to the other economic challenges these tariffs create. For that, I’ll turn to Rand Paul (one of the few Republicans willing to publicly admit that this is a tax increase that is being enacted without the Constitutionally required Congressional consent):

“I haven’t had a single business person or individual in my state come up to me and say the tariffs are a good idea,” says Paul. … “I have had people come up—farmers which are a big presence in our state—and say they export 20 to 25 percent of their products and this will hurt them,” says Paul. “They are still suffering from some of the tariffs and retaliation from 2018 and 2019, when the previous Trump administration did tariffs,” Paul said. “I have home builders and real estate brokers who say if the price of lumber goes up, if the price of steel goes up, the prices of homes will go up and we’ll sell less homes. I have the bourbon distillers coming to me, which is a big industry in my state, and they say due to the retaliation that Europe is placing on us and Canada is placing on our bourbon, we will export less bourbon. We have shippers in our state, people who ship internationally as well as across the U.S.” [source ]

Paul’s point about farmers is an important one, as during the last Trump Administration, the government had to “bail out ” farmers to help them survive the self-inflicted wounds of the last trade war. To my knowledge, there have been no budget provisions made for the current budget and tax plan working its way through Congress to create a similar fund proactively. That forward planning failure seems kind of important if we let history be our guide. That’s before we get to how the budget’s tax cuts are primarily based on shifting tax burdens onto these tariffs.

Extending the expiring 2017 Tax Cuts and Jobs Act (TCJA ) would decrease federal tax revenue by $4.5 trillion from 2025 through 2034. Long-run GDP would be 1.1 percent higher, offsetting $710 billion, or 16 percent , of the revenue losses. Long-run GNP (a measure of American incomes) would only rise by 0.4 percent, as some of the benefits of the tax cuts and larger economy go to foreigners in the form of higher interest payments on the debt. [Source ]

To me, at least, (not to mention most economists and trade experts) this has the makings of an unmitigated disaster for the country. And, unlike some things the President has done since being elected, this is a case where he promised to do this throughout the campaign. And frankly the rationalization that “we have to do something about our trade deficit and debt and at least this is something” is akin to a surgeon suggesting the best way to deal with brain cancer is just to remove the head altogether.