But Mr. Trump wants tariffs for their own sake, which he says will usher in a new golden age.
We’ve courted Mr. Trump’s ire by calling the Mexico and Canada levies the “dumbest” in history, and we may have understated the point. Mr. Trump is whacking friends, not adversaries. His taxes will hit every cross-border transaction, and the North American vehicle market is so interconnected that some cars cross a border as many as eight times as they’re assembled.
Mr. Trump also objected when we reported an analysis by the Anderson Economic Group that the 25% tariff will raise the cost of a full-sized SUV assembled in North America by $9,000 and a pickup truck by $8,000. Is this how the new Republican Party plans on helping working-class voters?
• Negligible effect on the inflation rate, as measured by the CPI index or the PCE index. If inflation doesn’t budge, expect a bunch of Trump boosters to try to say they told you so, when in reality, we wouldn’t expect tariffs to have much of an effect on the economy-wide inflation rate. Tariffs make imports more expensive, which will result in less spending elsewhere in the economy. Tariffs do not increase the money supply, so we wouldn’t expect them to have a big impact on inflation.
• Higher prices for the goods to which the tariffs apply. Foreign businesses will mostly not compensate for the tax increase by lowering prices, as the Trump administration claims they will. The tax will be passed on to American consumers and businesses, as it was during Trump’s first term. Because Canada and Mexico are among the top buyers of U.S. petroleum products and sellers of U.S. crude oil imports, expect energy markets to be thrown into a tizzy if energy products are not excluded.
National Review‘s Andrew Stuttaford isn’t impressed with Trump’s “tariff magic.” A slice:
The economic logic behind these tariffs being imposed on our two closest neighbors is, uh, questionable, and the geopolitical consequences are not likely to be that great either. The chances of Mark Carney, green zealot and Davos man par excellence, winning the next Canadian election just went up another notch.
Trump has started a trade war.
“Warren Buffett calls tariffs ‘an act of war’.”
The Atlanta Fed is pessimistic about near-term economic growth.
2024: BIDENFLATION IS DESTROYING AMERICA
2O25: so prices increase whatever it’s fine
For nearly 60 years, the United States steel industry has been one of the most protected sectors of the American economy. Policymakers have showered an unsavory mix of trade restrictions to benefit domestic steel firms including quotas, tariffs, aggressive trade remedies, and procurement preferences. With the Trump administration promising a new onslaught of protectionism, steel prices are rising even before the tariffs are implemented. As always, consumers will pay the price.
In 2018, the first Trump administration imposed 25 percent “national security” tariffs on steel imported from virtually every country in the world in a bid to boost domestic steel output (despite the Secretary of Defense noting at the time that the military only needed 3 percent of domestic steel production). Those tariffs imposed significant costs on the American economy.
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To be sure, there was no mystery before the recent steel tariffs announcement that they would harm domestic manufacturing and other steel-consuming industries. Multiple economic studies, including a US International Trade Commission report calculating the tariffs’ disproportionate costs to the manufacturing, construction, and energy sectors, clearly show that this has been the case ever since the tariffs were first imposed in 2018.
Moreover, as some of these studies also indicate, steel-consuming industries employ at least 46 times more workers than those employed in domestic manufacturing, so far more Americans stand to be hurt than helped by the tariffs. If President Trump is truly interested in boosting American manufacturing, fueling the long-running price disparity between US and global steel prices through misguided and demonstrably ineffective tariffs is not the way to do it.
Scott Atlas, writing in the Wall Street Journal, argues that “America still needs a covid reckoning.” Two slices:
The mismanagement of the pandemic hit us personally and exposed a massive, across-the-board institutional failure. It was the most tragic breakdown of leadership and ethics that free societies have seen in our lifetimes.
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Especially in the U.S.—where the Declaration of Independence proclaims that all men are “endowed by their Creator with certain unalienable rights”—it is stunning that liberty fell so quickly and thoroughly by government decree and with public assent.
Why did free people accept Draconian and illogical lockdowns? The answer reveals the reason for the silence on the pandemic. Censorship and propaganda are part of the explanation, tools of control that convinced the public of two lies—that there was a consensus of experts in favor of lockdowns, and that dissent from that false consensus was dangerous.
Yet that alone doesn’t explain today’s silence about that extraordinary collapse. It is also that so many smart and influential people were complicit. They bought into and even advocated irrational measures that defied data, biology and common sense. That acquiescence—frankly, cowardice—and the failure to grasp reality are inconvenient truths that, understandably, no one wants to revisit.
