Tariffs Are Working

Additional Sources

Apr 09, 2025

Hi friends,

Here are ~40 of the articles I read and gathered information from for the ‘Tariffs Are Working’ Substack on 4/9/2025:

https://www.cnbc.com/2025/03/10/trump-says-transition-period-likely-for-economy-and-you-cant-watch-the-stock-market.html.

The Dispatch 4/4/2025

Ahead of his sweeping tariffs rollout, President Donald Trump assured Americans that the short-term economic pain would be well worth the long-term gain. Time will tell whether his constituents—and the markets—agree, but early fallout from the administration’s latest and most dramatic escalation in its global trade war hints at more than just a “little disturbance.”

Speaking from the White House Rose Garden on Wednesday, Trump unveiled plans to impose tariffs on nearly all imports to the United States. “This is one of the most important days, in my opinion, in American history. It’s our declaration of economic independence. For years, hardworking American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense,” he said. “With today’s action, we are finally going to be able to make America great again, greater than ever before.”

But Wall Street seemed to disagree. On Thursday, the U.S. stock market suffered its worst day since 2020, with all three major indices cratering in the wake of the announcement: The Dow Jones Industrial Average dropped 3.98 percent, the S&P 500 sank 4.84 percent, and the NASDAQ plummeted 5.97 percent.

The long-awaited tariffs, declared in the name of a “national economic emergency,” included 10 percent “baseline” duties on most foreign goods, as well as higher, tailored tariffs targeting countries Trump accuses of “cheating” the United States. Together with the president’s previous rounds of levies, the expansive tariffs package will bring the U.S.’s effective tariff rate even higher than it was during the Great Depression. Economists are now warning the administration’s dramatic break from the conservative movement’s longtime embrace of free trade could isolate the U.S. economy and plunge the country into a recession.

Trump’s 10 percent flat duties are set to take effect on Sunday, while his higher tariffs—what the administration describes as “reciprocal”—will go into place on April 9. But the latter levies don’t actually correspond with the alleged offenders’ restrictions on U.S. imports. Rather, the government calculated the rates by dividing the country in question’s 2024 bilateral trade deficit by its exports to the United States, and then dividing the result by two. “Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners,” the U.S. Trade Representative said in a statement explaining the algorithm.

The problem with this calculation, economists say, is that it relies on the false assumption that uneven bilateral trade balances are a reasonable proxy for foreign trade barriers. In reality, deficits are not always reflective of unfair trade practices or an unhealthy economic relationship. As Kevin Williamson wrote today in a piece for the site:

Tariffs are not the only reason—or even the main reason—for imbalanced trade among nations. U.S. firms and consumers buy a lot of tropical fruit and low-cost goods from firms in poor countries where the people do not buy a lot of Boeing products or $300 selvedge jeans made in the United States on account of their being, you know, poor.

At the same time, the metric failed to factor in the United States’ own existing restrictions on buying foreign goods, from sugar quotas to the 1920 Merchant Marine Act. “It simply assumes that the United States is some sort of free trade paradise that’s being abused by foreign countries,” The Dispatch’s own Scott Lincicome told TMD. “Trump imposed hundreds of billions of dollars in new taxes without any congressional authorization or public input, and he did so based on a methodology that is utterly detached from economic reality.”

Using trade deficits for the formula has led to some “bizarre outcomes,” he added. For example, even countries with free trade agreements with the United States—including Singapore, South Korea, and Australia—have been caught up in the tariff spree. As did countries with which the U.S. has a trade surplus. Meanwhile, a handful of countries—including Russia, Cuba, Belarus, and North Korea—were spared on the grounds that sanctions already prevent a meaningful trade relationship.

For Trump, the sweeping tariffs—together with 25 percent duties on cars and car parts that took effect this week—are a way to usher in another “golden age” of American manufacturing. According to the U.S. Trade Representative, more than 90,000 plants have closed and upwards of 6.6 million manufacturing jobs have been lost since 1997. By intentionally driving up the price of foreign goods, the administration hopes to encourage foreign companies to move their factories to the United States, spurring new job creation in a long-declining sector.

But because the U.S. still relies heavily on foreign suppliers for intermediate goods like raw materials and car components, economists worry the tariffs will have the opposite effect. “For this to be successful, you need to have long-term stability in the trade policy. I think what’s problematic here is that we have recently seen that actual investment in the U.S. has declined,” Felix Tintelnot, an associate professor of economics at Duke University, told TMD. “The cost of doing production in the U.S. just went up.”

Experts also worry this latest move could expedite a looming recession. The U.S. dollar fell against most major currencies on Thursday—contrary to conventional wisdom that tariffs strengthen the value of the local currency—as investors seek out safe assets. “In past waves of tariffs or tariff announcements by the administration, usually the U.S. dollar strengthened relative to other currencies. Now we are seeing the opposite: Capital is leaving the United States,” Tintelnot said. “How can you plan your business operations in this way? It’s really astonishing.”

Already, an internal blame game has begun to play out among top U.S. officials. According to a Tuesday report by Politico, many people within the administration are preparing to point the finger at Commerce Secretary Howard Lutnick—a main champion of the sweeping tariffs plan—should the fallout persist. Lutnick is “a new voice at the table pushing crazy shit,” a person familiar with the situation told the outlet. “I don’t know anyone that isn’t pissed off at him.”

But for stalwart supporters of the protectionist trade policy, upending the global economy is the whole point. Through tariffs, they argue Washington should accept—and even embrace—the decline of the U.S.-led liberal world order.

“China is now rising as a pure competitor. The U.S. cannot be a unipolar hegemon like it was when the Cold War ended,” Oren Cass, the founder of the think tank American Compass, told Jon Stewart on a Monday episode of The Daily Show. “We absolutely want a strong economic and security alliance. It’s not going to be the whole world, because China’s going to have its own sphere as well. But what we want to have within our sphere is a few things that, in the past, the U.S. didn’t necessarily ask for. We’re going to want balanced trade, where in the past we were happy to let the manufacturing go elsewhere.”

But experts warn sweeping tariffs, far from shoring up the U.S.’s existing alliances, actually risk pushing longtime partners into China’s orbit. On Monday, for example, Beijing announced plans to coordinate its response to the new American duties with South Korea and Japan.

If Trump’s Tariffs Work, It Will Be Epic

I & I Editorial Board

April 3, 2025

“April 2nd, 2025, will go down as one of the most important days in modern American history.” — White House Press Secretary Karoline Leavitt.

We have no doubt that Leavitt’s prediction will come true. Whether it’s remembered for being a success or as Smoot-Hawley 2.0 remains to be seen.

“It is going to work,” Leavitt said. “And the president has a brilliant team of advisers who have been studying these issues for decades.”

That’s a bit of an odd boast, given that the economists who have been studying tariffs and trade policy for decades had long ago decided that tariffs are a sledgehammer approach that rarely work as intended, that they are a wildly expensive way to create jobs, don’t spur economic growth, protect uncompetitive U.S. firms, and are an ineffective diplomatic tool.

National Review recently published an article tracing papers from the Heritage Foundation going back to the early 1980s arguing for the benefits of free trade. The article is meant as a criticism of Heritage President Kevin Roberts’ recent defense of Trump’s tariff strategy.

But a separate article in National Review also admits that other countries routinely impose far higher tariffs on U.S. goods than our country levies on their exports into American markets. “In some places, our companies are paying a significantly higher rate to sell our goods there than they pay to sell their goods here. That does seem at least a little unfair, doesn’t it?” writes never-Trumper Jim Geraghty.

Geraghty also admits that some countries were lowering their trade barriers in anticipation of Trump’s reciprocal tariffs: “The European Union is identifying concessions it’s willing to make to Donald Trump’s administration to secure the partial removal of the U.S. tariffs that have already started hitting the bloc’s exports and that are set to increase after April 2.”

But what is Trump’s ultimate goal? On the one hand, he says he wants only to level the playing field between industrial nations. That’s what all those free trade agreements that conservatives long championed were supposed to do, but have not succeeded, according to Trump.

“Trading partners have repeatedly blocked multilateral and plurilateral solutions, including in the context of new rounds of tariff negotiations and efforts to discipline non-tariff barriers,” Trump writes in his executive order. “At the same time, with the U.S. economy disproportionately open to imports, U.S. trading partners have had few incentives to provide reciprocal treatment to U.S. exports in the context of bilateral trade negotiations.”

If Trump’s approach works better than all those trade deals at bringing down other nations’ tariffs, who can complain? Certainly not free traders.

On the other hand, Trump keeps saying things such as raising “trillions and trillions of dollars” from tariffs “to reduce our taxes and pay down our national debt,” and that up until 1913, the federal government largely depended on tariffs as a source of revenue.

Trump also argues that “jobs and factories will come roaring back into our country” as companies try to avoid tariffs by reshoring production work. “We will supercharge our domestic industrial base.” His plan also includes a 10% across-the-board tariff on imports.

All of which suggests that Trump wants to build a large and permanent tariff wall around the country. We are hard-pressed to believe that will work, but Trump has proved us wrong before.

For the sake of the country, we hope Trump’s liberation day is remembered in future history books … and for all the right reasons. And if that’s the case, it will be seen as another remarkable odds-defying achievement for the 45th and 47th president.

1) Demanding fairness and reciprocity: For decades, friends and foes have taken advantage of American generosity, including military and other aid, while at the same time erecting barriers to competition from goods produced by American workers. No longer.

Even our closest allies still impose tariffs, quotas, labeling restrictions, foreign ownership limits, and bureaucratic red tape that keep American products and companies out of many markets.

Trump’s reciprocal tariffs are a tool of statecraft that can level the playing field. If foreign nations want to avoid these tariffs, then they must remove their trade barriers. It’s really that simple.

From still impose tariffs:
https://www.dailysignal.com/2025/02/06/trumps-tariff-critics-are-trading-on-overblown-and-unfounded-fears/

God bless you, God bless President Trump and team, and God bless America!

As always, do your own research; make up your own mind.
References to other sources do not necessarily reflect my opinions, and I make no claim to their veracity or completeness. I provide them for your consideration.
(AI may have been used in this article.)

Stay calm - President Trump is a businessman who operates strategically, and not everything will make sense at first. His plan to shrink government and Make America Great Again is a process, not an overnight fix. Trust the long game, not just the headlines.

United we stand. Divided we fall. We must not let America fall.

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Until next time…

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