by Rod Williams, March 7, 2025 - President Trump loves tariffs of that there can be no doubt. He has said the word "tariffs" is the most beautiful word in the English language. He was an advocate of tariffs long before he even became president. He imposed some limited tariffs in his first term but surrounded by sane people who understand economics he was dissuaded from launching an all-out trade war. When running for President this last campaign he often spoke of tariffs, even saying he would use tariffs to fund the government and would abolish the income tax.
Since taking office this second term, Trump announced tariffs on Mexico and Canada and China, then paused the tariffs on Mexico and Canada for thirty days, then instated tariffs on those two countries at the end of that thirty days, then said he would pause the tariffs of auto imports from Canada for thirty days, then he paused almost all tariffs on Mexico and Canada. Also, on April 2nd he has promised so-called reciprocal tariffs on almost all countries. He has stalled the tariffs and waffled so much it is hard to keep track. While Trump loves tariffs, he also does not want to see a stock market crash and the stock market tumbled as a result Trump's tariff policy, so one may assume that is what has led to Trump's on again-off again waffling.
In addition to the on again-off again actions on tariffs, Trump's reason for imposing tariffs have been all over the place. One reason he offers is that he is imposing tariffs to force Mexico and Canada to do something about the fentanyl problem in America, although it is hard to see how imposing tariffs would affect the fentanyl trafficking issue and despite the fact that only about 1% of the fentanyl imports come from Canada.
Trump has also offered as a justification for imposing tariffs the raising of revenue, the protection of American industries from competition, and because "we have been treated so unfairly." A lot of this makes no sense. Tariffs almost always punish the importing country as much or more that the exporting country. As much as Trump may deny it, tariffs are paid by the importer of goods, and ultimately the purchaser of imported goods, and not the exporter of goods.
Tariffs can do several things. They can raise revenue, they can protect domestic producers, they can enhance national security, and they can get other nations to change behavior. They cannot do all of these things at once. They can also weaken alliances, cause an increase in prices even included the price of goods not subject to the tariff, destroy export industries, and lead to a worldwide economic collapse. Also, tariffs are subject to the Laffer Curve effect just like taxes on income or consumption. At a certain level, lower tariff rates bring in more revenue than higher tariff rates and we do not know the shape or the slope of the curve. To increase tariffs to bring in more revenue can backfire.
President Donald Trump has often cited the 25th President, William McKinley, as an inspiration for tariffs. He again praised McKinley and tariffs in this recent not state of the union address to Congress. The ‘McKinley Tariffs’ were some of the largest hikes in U.S. history, but in his second term, McKinley changed his mind, and argued for more free international trade as a way of helping the U.S. economy. The above video explains why McKinley changed his mind on tariffs.
Let us hope that Trump can learn from hero William McKinley and see the folly of shooting ourselves in the foot.
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