Tariffs

48 thoughts on “Tariffs”

1. Just sat in on the Flexport zoom call about the tariff announcement. One thing that probably is not well understood is that tariffs are *stacked*, ie various tariffs enacted at various times can be added to one another. One example given was of a sofa imported from China that would face a tariff of 79%.

2. Another interesting comment from Matthew Chang at X:

   “I have a truckload of robotics sitting at the Canadian border. This is going to cost $100k+ in tariffs. 2 trucking companies have bailed on the contract since last week and our broker can’t get a 3rd. We are delivering the robots to a US manufacturing company who is expanding production.

   I expect tariffs to be a marginal cost increase on our CAPEX project of 4-5%, since all the engineering, trades, install, and software are made in USA. Lots of the equipment too.

   So,
   @howardlutnick
   , consider me has having paid my fair share to meet your $1TN external revenue goal.

   I’m totally here for it. Small price to pay for bringing manufacturing back to the USA and reindustrializing. We are going to manufacture at pace that almost no one alive has seen before.

   Would you rather pay 2-5% extra capex or 10-25% on all imported goods.

   Since I build advanced manufacturing facilities for a living, I expect to be getting a lot of calls in the near future.

   We are so back.”

   https://x.com/matthewachang/status/1907266773268799917

3. The Democrats want higher taxes on energy, capital gains, vehicles bigger than Priuses, communications, technology, etc. This is called “socialism” or “nudging” or “smart growth”.

   Trump wants higher taxes on imported goods. This is called “tariffs” and many conservatives believe that it’s somehow different than the kinds of taxes Democrats like to impose.

   Maybe the imposition of tariffs is an effective negotiating tactic. Time will tell. But, as policy, taxing imported goods and services isn’t much different from taxing SUVs or subsidizing battery factories. The government shouldn’t pick winners and losers; it shouldn’t be in the business of penalizing the customers of imported goods.

   Trump’s tariffs are perhaps less stupid than the Democrats’ green energy subsidies, but they are stupid nonetheless.

4. In my libertarian youth, I learned about the horrors of tariffs, Smoot-Hawley in particular, and how they’re a tax, and how protectionism essentially protects the inefficient industries and division of labor, and trade stops wars, and so on and so on.

   But since I’ve been listening to Donald Trump wax rhapsodic about tariffs (and listened to a lot of commentary because people are now forced to talk about them), I’ve learned a lot more. For example, a lot of the tariffs regarding Europe and China date back to the end of World War II, when the US accepted those tariffs from other countries to encourage them to rebuild their shattered economies. And it worked, bootstrapping Europe and Japan into world economic powers. But once they were on their feet again, the tariffs didn’t go away. I’ve been hearing how whatever tariffs we’ve laid on Canada are not mirrored, but in fact Canada’s are much higher that ours. And I’ve learned that Canada and Mexico are essentially China’s backdoor into the US markets. If Chinese companies build in our neighbors, they’re not subject to tariffs we’ve placed on goods made in China.

   And I’ve learned that all of these factors led to the virtual end of manufacturing in the US, making us dependent on buying from other countries, the ones charging us onerous tariffs.

   So, while the US was underwriting European security via NATO and Japanese security via our defense agreements with them, we were also underwriting their economic security by allowing them to levy tariffs on the goods we sold to them and keeping our own trade barriers down.

   Today I went to Cafe Hayek, one of the blogs in the blogroll. I used to look at it a long time ago, and then a few times since I discovered this blog. It is virtually a one-note symphony, dragging tariffs and any trade policy other than no trade barriers at all. And now it’s on steroids, Don Boudreaux having kittens about the “disaster” impending because of these “clowns.”

   If I were to write to Boudreaux (you can’t comment on his posts), I would ask him this:

   If someone who had abused you for a long time was coming at you again and you had a gun such that if you pulled the trigger two bullets were fired. One was a big bullet that would really do damage to your attacker, and the other was a smaller bullet that would hurt you but not as much, would you pull the trigger?

   That’s how I look at tariffs. They’re not intrinsically an economic tool, they’re a policy tool, albeit a blunt one. These tariffs may hurt us in the short term. Wall Street may not like it. It may damage Q2 ROI for many investors. But the majority of the country are not investors concerned with Q2 ROI. They’re people trying to earn a good living, to enjoy their lives. Like Batya Ungar Sargon said on Piers Morgan’s show, the American people are now led by a man who will put them first and tell Wall St to get bent. She’s definitely a class warrior, but many of our problems, especially trade, boil down to class. America’s advantage is that we are most countries largest market. I figure they will eventually cave, fearing damage to their own domestic markets. This is a game of chicken, and Donald Trump is behind the wheel and not turning.

   I’m willing to put up with a little pain in the short term if our trade relationships become fairer down the line. If only out of a sense of justice. Other countries have taken our good graces for granted for too long. World War II was eighty years ago. Time for the relationships to change.

5. Wall Street can go pound sand. I’m old enough to remember when the Dow Jones Industrial Average was well bellow 1,000. As I look now it’s above 40,000. Wall Street and the relatively small percentage of the public that owns most stocks has been getting rich for decades by building factories in foreign countries so they can close them here, importing foreigners to work here for far less than Americans, and buying back shares to keep stock prices high.

   All of these are bad for the country at large. If nothing else our so-called elite should recognize that we can no longer afford and no longer have the industrial capacity to defend a globe-spanning swarm of “allies” who are also our economic competitors- but no, they are frothing-at-the-mouth angry that Trump has noticed and is attempting to act.

   If something can’t go on forever it will end. We can either end our Cold War era trade policies now, mostly on our own terms- or keep them the same and end up with a Soviet-style economic and political collapse.

   The status quo just isn’t sustainable.

6. The problem with free trade is that it’s never been tried. If you ever tried to ship something substantial overseas, anywhere, you’d find out damn’d quick that they aren’t bashful at all about tariffs and all sorts of other “requirements”.

   Trump is 100% correct that the de-minimus rule was allowing fentanyl and much else in the flood of cheap Chinese crap through the Post Office. Not just that, but we actually subsidized the postage due to the Postal Compact that classed China as a “developing” country. Every one of those Temu or Shein packages probably cost the tax payers about $5-10. Probably more that the purchaser paid in many instances. Just not having to see all those Temu and Shein adds will be worth it. Legitimate importers will pay duty on the wholesale cost which ain’t nothing but a lot less than retail. They’ll also be far easier to police.

   Huge warehouses were being built in Mexico and probably Canada to break-bulk mostly Chinese imports under bond, so no Mexican tariffs, and send them into the U.S. under de-minimus, one package at a time. By the way, the de-minimus limit for imports going into Canada is $10, ours was $800.

   At least the Quebec tariff on dairy was democratic, they charged the same for dairy products from the rest of Canada too.

7. I thought this blog was started by U of C grads. Is this what the Chicago School has become? Supporting central economic planning by the government, picking winners and losers, and dictating investment and spending decisions by businesses and consumers? American consumers told American businesses through their spending decisions that they wanted inexpensive goods, and American businesses complied. It so happened that many of those goods came from overseas. I run a trade deficit with my local grocery store. I buy more from them than they buy from me. Are they ripping me off? I don’t think so, but if the government starts telling me I have to buy only from them, and another store has cheaper stuff but I’m going to be taxed out the wazoo for shopping there, I’m not going to be happy. Come on. I thought this blog would be worthy of the U of C. Guess not.

8. I think the economic results of the Bretton Woods system can be summarized thus: the US government allowed foreign manufacturers to sell into our market without tariffs, regardless of what their governments did. Then, instead of using the dollars they got in exchange for their goods to buy goods from American manufacturers (or to invest in American firms, or any other useful purpose) the foreign manufacturers bought Treasury bills to hedge against their own government’s fiscal policies, thus making the dollar the “world’s reserve currency”. This in turn allowed the US government to borrow extravagantly and extend its scope enormously; in effect, the US trade deficit is paying for the government’s budget deficit.
   I don’t believe the arguments for free trade contemplate this situation. If the dollars sent abroad were coming back in exchange for real products the US trade deficit would be harmless; some industries would suffer, but others would flourish, and dying firms would be replaced. But government debt isn’t a real product; the firms that died because they couldn’t compete with imported goods were replaced by federal agencies, to the great detriment of our economy.
   The real reason for Trump’s tariffs, then, is to cut off this flow of money from US consumers to the Treasury by way of foreigners. It would be more efficient to do so by not selling Treasury bills to foreigners, but Trump needs Congress to shut down federal agencies before he can do that. At any rate, breaking what’s left of Bretton Woods is necessary to curb the US welfare state.

9. I had been writing my own piece on tariffs, but David’s has sparked a spirited debate so I will wait a while and either modify or spike mine, but a few quick thoughts from it

   I don’t like tariffs. As a policy instrument, they quickly become a magnet for corrupt rent-seeking and economic distortion.

   Having said that there is no such thing as “Economics” in the real world, only “political economy” The free-market economics from the Chicago School has historically been wildly successful, especially compared to the social democratic models it displaced but it seems to ignore the social aspects of the ”creative destruction” as mere implementation details.

   The “problem” with democracy for theoretical conformists lies just as much with the Right as the Left in that people – even the social and economic losers – get a vote. You can write off parts of the supply chain and off-shore, but in a democracy you write off the people from those industries at your peril.

   On a separate note, I have sympathy with those on the Right who have a hard time grasping why this is happening. It is hard to swallow. Alot of this stuff though had become apparent in the late 2000’s though not yet politically manifest and who did the Republicans and The National Review nominate/or cheer on from 2008 through 2016? John McCain, Mitt Romney, and Jeb Bush,… which is why they never became president and Trump did.

10. I thought this blog was started by U of C grads. Is this what the Chicago School has become?

    You see this Chicagoboyz? You’re failing him because you have insufficiently opposed tariffs. Do better, or else.

    Supporting central economic planning by the government, picking winners and losers…

    Worried about your stock portfolio?

    Anyway, how are reciprocal tariffs any sort of central economic planning? How are they picking winners and losers, aside from attempting to make more American companies winners? Btw, I want American companies to be the winners.

    …dictating investment and spending decisions by businesses and consumers?

    The government already dictates the investment and spending decisions of Americans, via about a trillion pages of rules, regulations, and even the occasional law. This generally encourages investment outside of the United States, to the benefit of a select few. Trump is attempting change this such that investment and economic activity is incentivized to remain and occur inside the United States. Two thumbs up from me.

    American consumers told American businesses through their spending decisions that they wanted inexpensive goods, and American businesses complied. It so happened that many of those goods came from overseas.

    Hogwash. What happened is that American consumers got charged the same price while globalist businesses cut their costs by paying foreigners vastly less than Americans. That was obviously more profitable. To quote Thomas Jefferson, Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains.

    I run a trade deficit with my local grocery store.

    To paraphrase something Abraham Lincoln said about a coat, when you buy groceries from an American company you have the groceries and an American has the money. If you buy something from a foreign grocery you have the groceries and foreigners have the money. I want Americans to have the money.

    …if the government starts telling me I have to buy only from them, and another store has cheaper stuff but I’m going to be taxed out the wazoo for shopping there, I’m not going to be happy.

    This isn’t really about groceries. It’s about whether or not the US should be able to arrange it such that manufacturing and the associated activities are economically viable inside our country. I think we should do that, using whatever tools we have available.

11. A French guy who posts frequently at X, Pascal-Emmanuel Gobry, says:

    “Shortly after the election I was invited to speak to a group of French CEOs to explain Trump’s economic policies. I was asked to summarize them in a sentence.

    Here’s what I said: “He’s going to raise the barriers around the country, and he’s going to remove the barriers inside the country. So if you’re exporting to America, Trump will be bad for you, but if you’re investing in America, Trump will be good for you–which is the whole point.”

    Here we are.”

    https://x.com/pegobry_en/status/1907811875850502434

    When you’re trading with someone outside the country, governments are inherently involved in the transaction.

12. If the manufacturing situation in the U.S. was a dire as some make out, and might have been heading at one time, these tariffs would be almost suicidal. As is, we are at worst #2. There are also numerous examples of profitable foreign owned enterprises here in many sectors, not least automotive.

    Experience over many years shows that these businesses and plants are allowed to operate on the exact same basis as fully American owned ones. Contrast this with China where Xi has been engaged in a clear and effective program for at least a decade to eliminate the ability of outside investors to manage or even receive a fair accounting of their investments. A law that makes disclosure of routine financial data a crime and there have been numerous arrests. A concerted effort, coordinated between media, law enforcement and regulators to make expatriot managers leave the country.

    Complacency and arrogance lead us to a trade policy that could most charitably be described as voluntary unilateral disarmament for the last, now, 80 years. Adhering to some noble theory of “free trade” when the rest of the world doing the exact opposite will end the same way that other forms of pacifism have .

13. Actually it is about groceries. The cost of living was a major issue in the election. These across-the-board tariffs will raise those costs considerably. One man, the President, is trying to change the course of US economic history through executive order. That sounds like central management of the economy, plus the kind of tyranny that resulted in not only the Declaration of Independence but the Constitution, where the founders separated the powers of government. The good news is we have a legislature, which, when it finds or is able to grow some balls, will hopefully reclaim that power. Thomas Jefferson was a brilliant writer and thinker on a great number of subjects, but also a bankrupt slaveowner. On economics, I prefer the ideas of Adam Smith.

14. Dan Brent: “The good news is we have a legislature …”

    Dan, old boy, sorry to have to break this news to you — the “legislature” is the biggest failure in the US system of governance. Instead of a “representative democracy”, we ended up with a bunch of self-serving buffoons who somehow manage to enter Congress as paupers and leave as multi-millionaires. Biden is only the most egregious example of this.

    Given the abject failure of Congress-scum to pay attention to the nation instead of to their own bank balances, it is great we finally have a President willing to take the risks of using executive power to make up for the many failures of Congress.

    You are right in that this is NOT the way the US Constitution was intended to work. But until we citizens drive the bipartisan scum out of Congress and replace them with true representatives who actually do their jobs, an active President is the best we can hope for.

15. It’s going to come down to who blinks first. We’re self sufficient in food and energy with a large manufacturing base and a huge domestic market. Compare that to our adversaries.

16. Actually it is about groceries.

    It’s fun to watch the people who were assuring us that the economy was g-g-great!!! a few months ago now handwringing about the price of groceries. Somehow I don’t think they really care about groceries at all, but are very worried about their stock portfolio.

    The cost of living was a major issue in the election.

    Well, yes. The people voted for Trump and they voted for tariffs. I’m glad to see another promise kept. But the people also voted for a president who noticed that our policies were failing the American people- jobs that could be offshored were, and foreigners were imported into America to replace us. Wall Street is big mad.

    One man, the President, is trying to change the course of US economic history through executive order.

    As Presidents often do, because that’s their job.

    That sounds like central management of the economy, plus the kind of tyranny…

    No it doesn’t.

    The good news is we have a legislature, which, when it finds or is able to grow some balls, will hopefully reclaim that power.

    The legislature has been a worthless set of lying grifters for my entire life. They’ll do whatever works best for their personal pocketbook, nothing more. Presumably, that would mean that they would step in to save your stock portfolio too- but if they did that, the public at large would be mad. So right now they’re sitting on their hands hoping the courts will stop Trump so they can resume stuffing their pockets with impunity once again.

    We’ll see. What can’t go on forever will end. Trump is attempting to get the United States off the glidepath to oblivion that our so-called elite have put us on, for their own benefit.

    If the price of success is that the stock market suffers, then I’m all in. Wall Street can die in a fire.

17. “Wall Street can die in a fire.”

    Along with the Constitution and the economy. Got it.

18. so what is really driving the return to a reasonable p/e ratio, it’s been too soon to test price resistance as it were,after a quarter that would seem likely,

19. A cynic would suggest concerted action by parties like black rock, vanguard and other large bloc aggregator funds,

20. The people voted for Trump and they voted for tariffs.

    A bit more than half of the people voted for Trump. Not all of those voters wanted tariffs. Me, I voted for: deregulation, pro-USA values, military buildup, support for Israel, cracking down on illegal immigration. I voted against: military weakness, socialism, anti-Americanism, support for Iran, abuses of power, corruption, DEI, CAFE, EPA, etc.

    Trump, on balance, is better than the alternatives. That’s about the best that anyone can hope for in a big country that elects its legislatures and chief executive. I don’t have to pretend to like tariffs and the other boneheaded parts of the election winner’s agenda.

    BTW, re Wall Street. Where do you think the capital to finance manufacturing businesses comes from? Tesla, to give one example, wasn’t financed by banks, by seed money from GM, Ford and Chrysler, or by Elon’s bar mitzvah money. Wall Street is an extremely effective capital allocation system that is the envy of the world and integral to much US and world innovation.

    I would add that there is a point at which the idea that one should ignore the noise and emotionally driven fluctuations in financial markets gets superseded by the question: Maybe this policy is a bad idea? I think we’re there.

21. Story posted at X today:

    “I work for an initiative that supports US manufacturing. Happy to connect you with as many people as you wish for a conversation. I can tell you a real life story from just last week: A small 3D printing company was going to outsource a casting mold to China, but with the tariffs, it was too expensive. They attended a metal casting bootcamp through our program, learned how to do it themselves, saved a crap ton of money and time. And attracted another $20K in business that week.

    It’s definitely happening.”

    https://x.com/CrystalEBentley/status/1908234140362957107

22. …learn to cast:

    https://www.metalforamerica.org/training/

23. I see a lot of blaming of offshoring on Wall Street, Bankers, etc. Actually, I think it has largely been driven by three factors. The first factor is technology. With the rise of fast and low-cost transportation modes (air freight, container shipping) coupled with universal and low-cost telecommunications, geographical factors have become much less important in production-location decisions. And there are billions of people in the world who will very happily work for much less than American workers are making. If US companies had not taken advantage of this low-cost labor pool, then non-US companies would have, and the US companies would have lost out in selling to US consumers.

    The other factor is China. I don’t think the Clinton administration’s decision to give China favorable tariff treatment was driven primarily by desire to offshore US manufacturing..rather, it was driven by the idea that there was a huge emerging Chinese market which US companies would be able to sell into. The degree to which China has succeeded in manufacturing, including sophisticated and high-value manufacturing, has been a surprise to many.

    The third factor is intellectual fashion. Most of the consultant and business-academic class has asserted that manufacturing is low-value and non-creative and that the US should specialize in ‘knowledge work’, although I don’t think they mostly had any clear idea of what that knowledge work would consist of, especially at scale.

24. A bit more than half of the people voted for Trump.

    Which gave Trump 100% of the Presidency. And as he campaigned on tariffs, the public voted for them whether they understood that or not.

    I don’t have to pretend to like tariffs and the other boneheaded parts of the election winner’s agenda.

    No you don’t. And I don’t have to pretend to care about the swarms of Wall Street grifters who have been selling Americans down the river for my entire life.

    Wall Street is an extremely effective capital allocation system that is the envy of the world and integral to much US and world innovation.

    I don’t doubt that at one time the Wall Street capital markets were a key part of what made America successful. But then they were opened up to foreigners with no loyalty to the United States and that changed. Lately, Black Rock has been famously involved in forcing DEI upon American companies, which I think we can agree is bad. Wall Street has also been involved in buying up houses to convert them into rentals and buying local HVAC companies to drastically raise the price for that service. I would submit that this is not in the interests of the public at large, even if it makes Wall Street more money.

    Maybe this policy is a bad idea?

    Who, whom? My guess is that changing US trade policy will be a win for most Americans, even though I don’t think the tariffs will stick. But that will likely be bad for Wall Street as it exists today.

    I’m willing to make that sacrifice.

25. David F: “I see a lot of blaming of offshoring on Wall Street, Bankers, etc. Actually, I think it has largely been driven by three factors.”

    Actually, four factors — you forgot the most significant factor, Number 0 so to speak

    Factor 0: Over-Regulation! We would all agree that some regulation is worthwhile. But since the 1970s (when the US was the workshop of the world), we have been beaten down by excessive regulations — largely thanks to the worthless denizens of Congress and to the evil people in Big Law.

    My favorite example was the company which planned to build duplicate battery plants in Michigan and China. The plant in China started producing product and climbing the learning curve in 9 months; the duplicate plant in Michigan took 27 months to get into operation, because of the regulatory burden. Of course, by that time the Chinese plant was streets ahead in efficiency. It is very difficult to catch up.

26. Yes, over-regulation has been an important factor…this has been enabled to some extent by my factor #3, intellectual fashion–the belief that all that stuff doesn’t matter all that much anymore, so no harm if the regs slow it down.

27. Dam Brent: “Along with the Constitution and the economy. Got it.”

    The Constitution in our “representative democracy” puts the primary responsibility on Congress. Since the US started to go off the rails in the 1970s, both Democrat and Republicrat oligarchies have had opportunities to run Congress and set the agenda. What they delivered was bipartisan abject failure, completely deserting their Constitutional duties.

    Where was Congress when the Budget started to go out of control?
    Does Congress even pass Budgets anymore?
    Where was Congress when the National Debt started to climb?
    Where was Congress when US industries started to shut down?
    Did Congress do anything to help reinvigorate US manufacturing when steelworkers, shipyard workers, automobile factory workers saw their jobs starting to go overseas?
    Where was Congress when the US flipped to chronic unsupportable Trade Deficits?
    Where was Congress when the US educational system began to fail?
    Where was Congress when US infrastructure began to crumble and fall short of international competitors?
    Where was Congress when the US stumbled into unwinnable destructive wars in Vietnam, Iraq, Afghanistan?
    Where was Congress when NASA lost the huge lead the US had established in space?

    We all know where the CongressScum were — padding their own pockets. Congress has been at the root of most of the US’s problems, failing to perform their Constitutional duties. If we want to protect the Constitution — as we should — we must first identify the enemy: the US Congress!

28. Never forget that our trade policy (as eluded to by a number of comments here) during the Cold War was ‘bribing up an alliance to beat Stalin’ as PZ likes to put it (when he’s right he’s right). The end of the Cold War resulted in a number of pivots attempting to maintain all the rice bowls that would be flipped by a more nationalistic and less security-oriented trade policy, including integrating China in the name of reform and claims of various economic and social benefits occasioned by divesting US manufacturing. One can certainly question if the benefits promised have been realized and were worth the cost.

    (PZ also likes to point out, in his sane moments lately, that the US has been on this course since at least 2001 and Trump’s way may be rough but the die were cast back in the Clinton-W era)

29. “Many critics of Trump tariff plan are complaining that the Liberation Day tariffs aren’t actually “reciprocal” tariffs because they aren’t set at the same rate as the trading party’s tariffs.

    Both the Richmans’ book and the Trump Administration’s executive order offer the same answer here. Since the goal is not to achieve “free trade”, it is to achieve balanced trade, therefore the method by which this is achieved is not “recriprocity of tariffs” but reciprocity of trade flows. ”

    https://treeofwoe.substack.com/p/balanced-trade

30. A thoughtful video by someone with experience running two manufacturing companies in the US

    https://x.com/rossiadam/status/1907934961459478603

31. One area that I do not begrudge tariffs by foreign countries is over basic foodstuffs. I see that as a fundamental national security concern for governments. We tried to starve the Germans in WWI, the Japanese in WWII, and the Viet Cong in the Vietnam War. Maintaining some basic level of caloric consumption from domestic production just makes sense.

    That said, a protective tariff against California almonds, a luxury good in my eyes, is just others protecting a special political faction. Pushing the Administration to fight other countries over almond tariffs is maybe too accommodating to domestic political factions. (I’m sure there are other specific cases beside almonds.)

    A Filipino friend in their government told me that when we (the US) opened trade with China, manufacturing in the Philippines collapsed. They used to make their own cars. Today their economy is driven by offshoring their labor and tourism.

32. I have heard some things over the last few days to make me believe this is necessary. Larry Arn of Hillsdale College said on the radio he heard that the Navy wants to build 3 submarines this year but can only build 2 – because a critical part is made in China (!?) and they can’t furnish 3.

    Our manufacturing base has been hallowed out – all in the name of globalism and cheaper things.

    And it has decimated the middle class.

    And that thought came to me that this is Trump’s core support.

    I can remember back in the early 70s a faction arguing for liberalizing trade with China with the rationale that a richer China will liberalize democracy – how has that worked out?

    I guess that was the start of the globalist movement.

    Interesting times we live in but things have to change here.

33. “Boots on the ground tariff anecdotes – We are a US-based PCB assembly shop; in the last two days, we have been inundated with programs looking to return to the US.”

    https://x.com/seddonandrew/status/1908121002313175545

34. Relevant: my 2021 post on the challenges of maintaining American premium wages in a globalized world:

    https://chicagoboyz.net/archives/66613.html

35. “the rationale that a richer China will liberalize democracy”
    Doesn’t seem to have worked that way in Europe, either.

36. That said, a protective tariff against California almonds, a luxury good in my eyes, is just others protecting a special political faction. Pushing the Administration to fight other countries over almond tariffs is maybe too accommodating to domestic political factions.

    Why shouldn’t the US government be looking out for American producers of almonds- and everything else? In my view we have a government for exactly that purpose.

    I note that the US used to have a thriving cut flower industry, which was then completely destroyed by “free trade.” That caused the US economy to shrink as those greenhouses were abandoned and the trade deficit rose as flowers were imported. Presumably our elites were pleased that the Colombian economy grew and were happy to get cheaper flowers.

    The people who worked at and owned the greenhouses and who lost their jobs and investments were presumably less pleased. Repeat this process a few hundred thousand times- and presto, the “free trade” consensus is gone, assuming it even ever actually existed.

    Larry Arn of Hillsdale College said on the radio he heard that the Navy wants to build 3 submarines this year but can only build 2 – because a critical part is made in China (!?)

    Of course it isn’t just about almonds or cut flowers. The same mindset that prioritized “free trade” also gave us a defense industry dependent upon manufactured goods produced by a country that quite plainly regards us as their enemy. Real genius, I tell you. Just for reference at one point in the 1960s the US was building nuclear powered attack submarines at seven different shipyards and in the 1980s was building four per year and one additional ballistic missile sub.

    A Filipino friend in their government told me that when we (the US) opened trade with China, manufacturing in the Philippines collapsed.

    I’ve also wondered why the US went so hard to build up China instead investing in pro-American countries like the Philippines. I dunno, but my best guess is that the US has been ruled by traitors, for many years. Thumbs down- and no, I’m not regretting my vote for Trump.

37. Why shouldn’t the US government be looking out for American producers of almonds- and everything else? In my view we have a government for exactly that purpose.

    Because the govt would be doing it at the expense of American consumers of almonds and everything else. That’s not the government’s job. It’s a job the govt does badly. And it reduces overall productivity. The only reason this is a political issue is that almond producers are visible, organized and politically active. Almond consumers, like consumers of most other products, are diffuse, disorganized and not politically active as almond consumers.

    There is an argument for keeping American production facilities for submarine parts, semiconductor chips, prescription drugs, etc. But the way to do that is for the govt to encourage or subsidize American producers of those critical products, not for the govt to tax entire categories of imported goods and services.

38. Speaking of doing business in China:
    https://urldefense.com/v3/__https://www.dni.gov/files/ODNI/documents/assessments/ODNI-Unclassified-CDA-CCP-Leadership-202503.pdf__;!!F0Stn7g!BGtjGJZ2zCf9fLE6Lb67oZjfMBXH7iZNrSPCVexwIfCfEc5tuNxsovPhCVwdxlaa4hqkKDoYXtM$

    Now do Congress.

39. Stomping your feet and jumping on your “free trade high-horse” probably feels good, but there are many facets to consider which may make these tariffs a net positive:

    1) National Security – our critical manufacturing infrastructure and supply chains have unravelled and are too weak from a national security perspective. We can’t build ships fast enough, we can’t build missiles fast enough, we can’t build 155 mm artillery shells fast enough, etc. etc. etc. And Biden depleted existing inventories significantly by giving tons of it to Ukraine. Something has to be done to restore/reshore our military manufacturing base.

    2) Wall Street – Wall Street was not elected President, and you don’t set policy based on the stock market. The tail DOES NOT wag the dog. So, where do you think all that money went from the recent two day sell-off? Hint…. check the yields on 10-yr US Treasuries. Greater demand for treasuries drives prices up ( and yields down) —- which is a GOOD THING. The interest expense on 36 Trillion of US debt will eat us alive unless we keep rates down. This is an existential issue for the United States. The Dow Jones loss is the taxpayers gain. Lower rates will also help out people who want to take out mortgages, business loans, etc.

    3) Jobs — I’d rather have slightly higher prices and a job, than no job and cheap goods. Your mileage may vary. It’s always easier to sniff at these benefits if you already have a good secure job, but imagine being a US autoworker or 2nd tier supplier worker who got screwed by NAFTA (‘Free Trade!”) ….. Sure cars are cheaper – but your job just went to Canada or Mexico!

    4) Fairness. The existing tariff structure was put in place after WWII to help our allies and former enemies to rebuild their economies. And just like NATO, our allies and former enemies gladly let the US pay the bills! ….Well, after 75 years it’s time for everyone to move out of dad’s basement, get a job, and their own apartment. The US should no longer be footing the bill – we’ve got our own deadbeat teenagers to pay for.

    5) The impacts are not set in stone – after all the bed-wetting from foreign governments, I suspect there will be a large line of people looking to play ‘let’s make a deal’. And Trump is the MASTER of the deal.

    5) China -Since the Clinton era our elites made a giant gamble that they could mainstream China into the world economically and politically through open trade. Many of them profited handsomely from this – but the results are in. The gamble failed. Time to decouple from China in every way possible.

    6) Inflation – The inflationary impact of these tariffs is nothing compared to the impact of Biden’s gigantic federal money hose that was waived around for 4 years.

    7) God forbid you have to substitute some American product for your favorite import.

40. So long ago that it’s when I first noticed parts for American cars made in Japan, I observed that when Ford bought alternators from a U.S. company, there were pretty certain to be some of those workers that would buy Ford cars. There was and still is no chance whatever that any of the Japanese, now Chinese workers would.

41. Then there is the moral quandary of “Free Trade”. We all agree that slavery is bad — we are so much better than those 18th Century Europeans who dragged unfortunate Africans across the ocean to work in horrible conditions on their plantations in the Caribbean and South America.

    Instead, we celebrate getting cheap clothes made by unfortunate people in Africa & Asia who work in harsh conditions that we would never accept for minimal wages that we would not touch.

    Is the kind of “Free Trade” we practice today the moral equivalent of Slavery? Will our descendants see us as the contemptible equivalents of Southern plantation overlords?

42. Gavin..in many of those cases, those minimal wages and harsh conditions are better than their alternatives. See the comments of a Chinese woman:

    “(Farming) is really had work. Every morning, from 4am to 7am, you have to cut through the bark of 400 rubber trees in total darkness. It has to be done before daybreak, otherwise the sunshine will evaporate the rubber juice. If you were me, would you prefer the factory or the farm?”

    Compare a North Carolina woman in 1899:

    “We all went to work in the Amazon Cotton Mill and we all worked there all our lives. We were all anxious to go to work because, I don’t know, we didn’t like the farming. It was so hot from sunup to sun down. No, that was not for me. Mill work was better…Once we went to work in the mill after we moved here from the farm, we had more clothes and more kinds of food…And we had a better house.”

    Cited at my post about the automation of apparel manufacturing:

    https://chicagoboyz.net/archives/59010.html

43. I appreciate what you are saying, David, but doesn’t it sound a lot like the French plantation owner saying that her African slaves were much better off being Christianized on her Caribbean plantation than back in Africa where they would probably have been abused and murdered?

    We Westerners are (temporarily) benefitting from the desperate situation of unfortunate people in distant lands who have no better alternative than to work for us for a pittance. Does the Leftie proudly driving her Electric Vehicle feel any responsibility towards the African children working in horrible conditions in mines to produce the minerals her environmentally-conscious vehicle requires?

    My guess is that history will see today’s Europeans & North Americans as hypocritical exploiters of human suffering in distant lands. Imposing tariffs which effectively reduce that exploitation will likely be seen as a morally correct action.

44. One approach would be to set tariffs based on working conditions in a particular country, including such things as worker safety and exposure to health hazards. Almost impossible to do objectively, though, and lots of possibilities for political gamesmanship.

45. The only reason this is a political issue is that almond producers are visible, organized and politically active.

    It strikes me as very backward to describe the present day American dynamic as having producers somehow organized to against consumers when almost every manufactured item is made elsewhere, to the detriment of domestic producers. And my take is that the only reason it’s a political issue now is because the DC Uniparty hasn’t been able to stop Trump from making it an issue. I’d bet the public was never on board with shipping our industrial base to China, which never mattered before Trump because our self-described elite was making bank.

    There is an argument for keeping American production facilities for submarine parts, semiconductor chips, prescription drugs, etc

    If so, then there is also an argument for keeping American everything else too. But note that our free tradin’ .gov is so full of smartitude that it arranged it so that we don’t make medicine, can’t make critical submarine parts, and can barely make semiconductors even though they pushed through a vast set of subsidies.

    This is what failure looks like. And when the people who created this mess tell me free trade is awesome I note how wrong they’ve been about everything else.

    They can go pound sand.

46. I suspect there is a lot of ‘hot air’ and clutching of pearls due to the horrific tariffs being imposed on our trading partners,
    I also suspect that some(many) of the propsed tariffs will never be enacted / imposed. I think they are a bargaining tool used by DJT to incent trading partners to modify their current tariff policy to be more favorable to USA.
    There will be some discomfort as things adjust. It seems that economic adjustments are always taken as a bitter pill, but sometimes a bitter pill is necessary to counter years of partners taking advantage of governments that are not responsive (actually) to their electorate. Campaign promises have been for the most part just decorations on a campaign, with little to no relation to actual policy.
    My take is that it is high time for both Houses to step up, and quit stuffing their pockets and those of their supporters and political pals. I think most people are tired of their reps/sens being sent of to DC, and after making loads of campaign promises come home with their own pockets full of cash, and nothing done to honor the promises made to the voters.
    So, in short, maneuvering tactics and bargaining chips are wearing the label ‘tariff’ in my opinion.

47. The Tariffs take effect on cargo loaded after April 5. So for goods from China, it will me around May 1 before they get here and probably late May before they get to a big box near you, if not later. Keep this in mind as you hear about price increases blamed on tariffs.

    The authority for imposing these tariffs is based on some sort of drug emergency so won’t be permanent without some sort of legislation. At the same time, removing the the emergency authority would also take legislation. The courts are likely to horn in too.

    The tariffs are levied against the invoiced wholesale cost of the goods, not including transportation. So that will be some fraction of the retail price, something else to keep in mind when hearing about price increases.

    The tariffs are supposed to be calibrated to balance trade rather than reciprocity. How this is supposed to factor into a drug emergency I’ll leave to the Solicitor General when this more or less inevitably goes before the Supreme Court.

    How this will play out in the long run is anybodies guess. There does seem to be some positive movement in just this short time:
    https://nypost.com/2025/04/06/us-news/50-nations-have-reached-out-to-negotiate-tariffs-with-us-lutnick/

48. MCS: “So for goods from China, it will me around May 1 before they get here and probably late May before they get to a big box near you, if not later. Keep this in mind as you hear about price increases blamed on tariffs.”

    That is a good point — but some retailers may have a different good point. Say, there is a retailer selling something imported he acquired for $100 wholesale. With tariffs, he knows that it will now cost him $120 to restock that item. Seems like a good argument for immediately charging the equivalent of $120 to reflect that increased cost of future restocking. Otherwise, that retailer is going to have to find an extra $20 from somewhere else to plow into inventory.

    Other retailers may find that customers are over-reacting. (Remember the Great Toilet Roll Panic during the CovidScam!) In which case, the retailer may raise the price beyond the equivalent of the $120 restocking price. It is one approach to rationing his stock — and one has to make hay while the sun shines.