You may recall, eons ago, just a few months ago, the focused terror and hysteria surrounding tariffs, made not just by the sworn enemies of the Trump administration, but by most of the professional class of economic leaders across the United States and globally, to include most of those same who had come to the point of softly supporting Trump and maybe even a few hard supporters as well. We had a one-week stock crash over the whole affair. Consequently, this is what I wrote way back then:
From Northeast Reader, April 5, 2024
Tariffs: Everyone is a naysayer about tariffs and the assumed impending wreck that will occur on our economy. I’ve read the backstory and it is indeed 4D chess. As I suggested some time back, tariffs change behavior. More immediate to that, name one thing in the past generation that’s improved or solved our trade balance or staunched the outflow of our industrial base and associated capital; and don’t forget the millions of families decimated by that outflow. I don’t think you’ll find anything. Let’s try America First. Status quo has had its chance for a very long time. Said naysayers are all over the price of an avocado or some such to prove that Trump is wrong on tariffs. Even hometown-Harry has more sophistication than that.
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Particularly with the matter of Tariffs, there’s [a] theme running through all these stories about the highly visible reaction to Trump’s initiatives. Certain classes of people have no patience, no tolerance to temporary hardship, no sense of delayed gratification, and no clue or curiosity about the highly technical objectives that need to be attained to get the country on track. It’s all about the price of that damn avocado and if it’s a quarter more, than ‘we’re outta here’. I could suggest that Trump administration should explain itself more thoroughly, but I recognize, that’s a fools errand. Let everyone bitch in the dark and when the lights come on, it’ll all work out.
July 30, 20125
Just a sample by Miranda Devine in the New York Post, of one of many articles this week summarizing the success of tariff threats, tariffs, and the Trump trade policies.
I’ll openly admit here, the primary purpose of this article is to say, ‘I told you so!’ But there is a secondary purpose, I want to explain a little more how and why I arrived at my predictive conclusion to get your own wheels turning. I’m spreading the wealth.
All the Kings economist, and all the kings men, couldn’t wrap their minds around how doing something different than fifty or a hundred years of failure would make a difference. Four months ago, the sky was falling. Today, my newsfeed is filled with stories about skeptics from big business, finance, and economics, big media, foreign leaders, and even some Democrat realist, are scratching their head at how Trump is taming the world’s economy to benefit the United States. What did I know that they didn’t? Did I or do I have special knowledge in economics and global trade? No. I do have a slightly better grasp on basic history than the average schlep that has none whatsoever, and I as an observer of behavior of attitudes and actions of some public figures, I can watch their trajectory, where they will venture, and what they are avoiding now.
I came to my conclusions based on the following
- Tariffs were a big slice of the bread and butter of our republic for most of our history until the rise of income taxes.
- Tariffs fell out of favor during the modern era as the United States ventured into perpetual global involvement.
- A great many of our trading partners have benefited wildly from taxing our exports. Tariffs work for them. Why not us?
- We have a huge trade deficit that is hurting us
- On a historical scale, trying tariffs again is akin to trying something new
- Since nothing else has worked to correct our imbalance, why should we, as Donald Trump has done, not try the old thing that is now new again. The rest is history.
More than any of these others, one reason, one mantra sticks more than anything else: Tariffs change behavior, and once the behavior is changed, you may or may not still need the tariffs. This is derived from another core tenant, only tax what you want less of. If you want more domestic production, trade and prosperity, and the main thing standing in the way of that goal is foreign providers taking all the pie and earning premiums on top of it, then tax it. This is not really that hard to understand. Sure our suppliers will pass that onto us for a little while, but sooner rather than later, that gap will begin to dissolve as production comes back on-shore. Why should we worry about the price of Barbie dolls when we should be far more concerned with building ships, mining minerals and energy, growing more things here, and building back our own factories and automation capacity?
None of this would have been possible without deal maker Donald Trump. Is Trump the only one that could have pulled this off? He obviously has a great team of people skilled at doing the nuts and bolts of trade deals so really, all it took was a President that has balls and the fortitude to press on when a hundred thousand experts in the upper echelon of the professional class were telling him that the economy would crash. The more intriguing question is why none of them had the fortitude to entertain tariffs and Trump’s trade strategy. That question, I cannot answer.
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