The Great Tariff Battles Begin

Trump's challenge to Canada and Mexico passed without incident, but the trade battles are just beginning. Here's why Trump's vision is essential to broad-based prosperity for everyone.

President Trump has never made any secret of his love for tariffs (a tax on foreign imports). He campaigned on tariffs in 2016, tweeted out “I love tariffs!” in 2018 and in this most recent presidential campaign, called “tariff” the most beautiful word in the English language. Trump’s affection for tariffs—one that is absolutely shared in this space—is well-documented. He believes—as does this space—in the tariff as a tool for protecting vital American industries, important manufacturing jobs, and for advancing U.S. foreign policy goals without resorting to killing people through military force.

Thus, it was no surprise, when Trump wasted little time in announcing tariffs of 25 percent each on Canada and Mexico, along with 10 percent on China. They were conditional—if the countries agreed to take action to stop the flow of fentanyl into the United States, the tariffs would be lifted.

After an intense 24-hour news cycle, with Democrats and tariff critics warning of higher prices, Canada and Mexico both backed down and agreed to Trump’s security demands. The more modest tariffs on China remain in effect.

We should note that “tariff critics” is a phrase that applies to the vast majority of elected Republicans and conservative intellectuals in Washington, even if they don’t feel in a political position to voice it right now. So, it was left to Democrats to try and shift blame for inflation. Senate Minority Leader Chuck Schumer (D-NY) paraded around with a bottle of Corona, warning of higher beer prices on the Mexican import. Here in Massachusetts, our own governor Maura Healey, tweeted out that higher prices were now on Trump.

For the short-term, Schumer, Healey and others looked foolish, given how quickly Canada and Mexico changed their tune. The tariffs were paused, and they look like people who don’t care about the fentanyl crisis, at least to the extent it impacts the price of their imported beer.

But the issue is merely on the backburner. The tariffs were only paused for 30 days. One way or another, this subject is going to keep coming up during the next four years. As with so much else of what’s going down in our government right now, the consequence is likely to be a lot of disruption and discomfort—but needed disruption and discomfort.

The Short-Term Challenges

While I don’t necessarily agree, it has to be conceded that the arguments that tariffs will cause higher prices at the grocery store is reasonable—after all, if an import is taxed, doesn’t that mean the producer has to sell it for more to retain their profit margin? And, if the price of imports is raised, don’t domestic producers have a little more room to bump up their own prices without compromising their market position? That’s the free trade theory, and unlike a lot of this theory, it’s not unreasonable. It is, however, too linear in its thinking.

This argument presumes an economic world that is static—where nothing changes except the tax on imports. If that were true, then higher prices would naturally follow. But nothing is static—human beings respond differently to a changed environment and policymakers have other levers to push prices down.

Let’s take the policy side. Government regulation is a far bigger driver of costs than a tariff. Trump has already issued an executive order which decrees that if agencies issue a new regulation, then they must find ten which will be removed. Furthermore, government spending is the ultimate inflationary fuel. The efforts of Trump and Elon Musk to expose the waste, abuse and fraud in the federal government are just getting started. All of this can be a counter-pressure on any tariff.

In fact, inflation is already cooling. The ultimate reasons are complex, as they are with any economic conversation. But economic and consumer confidence has been back on the rise for the past few months (perhaps historians can go back to around November and find out if there was any triggering event for this change of heart). And that confidence came with full knowledge of Trump’s views and plans on tariffs.

Those are some of the short-term ways the inflationary pressures of tariffs can be countered. The long-term is even more promising. The ultimate goal of this economic restructuring is to encourage more companies to set up shop in the United States, and to make it easier for the small businesses here to prosper.

Right now, we are relying on an influx of cheap imports, made with labor that is either enslaved or exploited, to keep prices down. The economy envisioned by Trump is one where the competition needed to control prices would be healthier.

But prices are just a small piece of this. The real issue is what free trade has done to the vast majority of the country in terms of economic opportunity and societal health.

The Current Economic Landscape

The economic structure—the business model of the United States if you will—under free trade, runs something like this:

*By allowing goods to be shipped into the most lucrative consumer market in the world tax-free, the U.S. government incentivized multi-national corporations to exploit slaves and cheap labor abroad, and then undercut domestic producers here in the home market.

*Manufacturing was the hardest hit, and states across the Rustbelt suffered. So did textile-friendly states in the South. Fishing industries here in New England were hit, as we even felt the need to import our fish from China. Basically, if it could be done cheaper abroad, it was. At no consequence to the producing company.

*This began to create a divide between the sectors of the economy that benefitted from the global approach and those that were being hurt. If you were in spaces like finance, law, and tech, life was never better. The stock prices of multi-national companies boomed. The cosmopolitan areas of the Northeast and Pacific Coast were thriving, with real estate prices skyrocketing. But in between those areas—that is, most of the country, it was a different story.

*With good-paying jobs drying up for those on the economic margins, the way to the middle class—or to stay there—was getting dangerously narrow. There were, broadly speaking, two ways to get out. One was to go to college. That meant taking on a crushing amount of student loan debt. Another way was to go into the U.S. Armed Forces, where we always seemed to have another war abroad to fight.

*For the vast majority, getting the student loans paid off was a long, grinding, never-ending road that hindered everything from family formation to buying a first house. For those that went into the military—well, there was always the next tour of duty in the Middle East or some other forsaken place. If you came back wounded or with PTSD, there was always a new form of addictive medication you could be given. None of which was helpful to marriage stability for the troops—and familial disintegration helps make sure this same landscape gets handed on to the next generation.

Does it sound pretty bleak so far? Sure. But if you’re in the Education Cartel, you’ve got a steady supply of young people coming in, and you exploit that by constantly escalating tuition costs. If you’re in the Military-Industrial Complex, you’ve got fresh meat for whatever your next war is. If you’re in Big Pharma, you’ve got a constant influx of new patients—including those suffering from depression, as they feel trapped.

So, free trade has its winners. If you’re in the right sectors of the economy, you can get very rich. If you’re on the wrong side of the tracks, it’s not so good. And the gap between rich and poor keeps getting larger. That’s been true regardless of whether a Republican or Democrat holds the White House. Although there was a curious exception in the years of the late 2010s, starting in roughly 2017. It’s another area for historians to explore and find out if there was some sort of triggering political change.

How The Landscape Sustains Itself

There’s a lot more people on the losing side of this equation than are on the plus side. How, in a society that prides itself on self-government, does this sustain itself. Like all the topics discussed here, that could be a book unto itself, but here are the basics:

*The most basic way is to just not give people a choice. The beneficiaries of the free trade economy are the ones who fund candidates. They simply took control of both parties. No one that actually was nominated by a major party explicitly campaigned on tariffs and disrupting this business model until Trump. Ross Perot did, but in a quixotic third-party bid. Barack Obama flirted with it, but it was more of a tease, and there was no follow-through.

*The end result was both parties betraying what they professed to believe. As Republicans stuck their chests out about projecting American power abroad, they pushed a trade policy that took industries vital to national security, from steel to electronics, and shipped them out. As Democrats stuck their chests out as the defender of the working class and immigrants, they were taking the jobs that were the stepping stone to prosperity and sending them away.

*The people who fund candidates and parties also fund corporate media platforms. CNN and Fox News might throw rhetorical bombast at each other, but their pundits never challenged the fundamental business model of their benefactors.

*Then there was control of the education system. In spite of the fact the United States was quite literally built as a tariff economy, generations of schoolkids were instructed in the myth that protective tariffs caused by the Great Depression. The myth even made in its way into the 1986 cult classic film Ferris Bueller’s Day Off. When the North American Free Trade Agreement (NAFTA) was debated in 1993, Al Gore used this myth to bludgeon Perot. While Perot’s business skills may have matched Trump’s, his debating ability and commitment were, by comparison, sorely lacking. And the free trade myth powered on.

By controlling the parties, the media and the educational system, the beneficaires of free trade had the basics in place to continue the racket. But just in case anyone got too crazy, there had a few more tactical gimmicks:

*To keep Republican voters in line, the Establishment used social and cultural issues. We were subjected to a seemingly endless parade of candidates and party platforms that were dressed up in a veneer of Christianity and the “culture of life.” It sounded great. It still does. But nothing ever changed. Until 2017.

*To keep Democratic voters in line, the Establishment always raised the specter of racism and whatever the in “phobia” was. But the condition of the cities never got any better.

*Both sides were further treated to ferocious debates over comparatively minor difference on taxes and spending. Issues like whether the top tax rate should be 38 percent or 41 percent were cast by the Republican Party as the difference between capitalism and socialism itself. The Democratic Party was no better, taking debates over whether a federal program’s rate of spending increase should be 5% or 7% and turning it a question of whether children would starve in the streets.

It was all a show set up so that people getting the short end of the stick in the business model, would keep fighting with each other. It was, as the fictional Terry Bendict realized in the remake of Oceans 11, simply staged theatre that took place while someone else walked out of the casino with millions (or, in this case, trillions).

The Consequences of Change

As Trump pushes needed change, I’m prepared for some level of disruption. As noted at the top, I think defenders of the status quo are overlooking ways to mitigate—if not outright prevent—some of the negative consequences. But what’s being proposed is nothing less than a wholesale change in the way the economic model of the United States is structured. Even those of us who trust the hand of the captain at the head of the ship should not assume smooth sailing.

That said, we should also carefully distinguish how much of the disruption actually impacts us and how much is media noise and the attendant worry that this can cause well-meaning people. Remember—the people who have the most to lose are the ones who have large platforms and a lot of ways to communicate their discontent. But they are a minority, and they are already well-off.

The bigger reality though is this—change has to come. The landscape I have outlined above is not sustainable for a country. It’s not fair or right to hotwire an economy in the way that’s happened to our nation over the entire postwar era, with a particular acceleration since the end of the Cold War. It’s dangerous to control a political system to such a degree that ordinary people feel their grievances can’t be heard.

One of the many failures of our educational system is the failure to communicate to social studies or civics students just how serious the issues of international trade are. Our own Civil War was driven by divisions over tariffs before slavery. The two were inextricably linked—the South, with an enslaved labor force, loved free trade. And it was a tariff law passed in 1828 that triggered for the first real fractures in the still-young Union, as the state of South Carolina proclaimed its “doctrine of nullification.” That was a prelude to outright secession, which went down over thirty years later.

When tariffs hold the power to choose economic winners and losers on the scale that they do, we should expect no less. They go to the very structure of economic life and of the ability for people to provide for themselves. Take that away—as our governing Establishment has—and you’re asking for a lot of trouble.

Had the bullet fired from the gun of Thomas Crooks found its target this past July in Butler, we would face a scary reality The huge swath of those left behind in this free trade economy would have had no voice in the political process. They would have no other choice but to continue the downward spiral outlined above.

Well, I supposed they would have had another alternative. One that neglected populations have taken recourse to over the years in nations around the world. I don’t know that’s an outcome anyone wants to give too much thought to. Mobs can get ugly.

Those that have benefitted from the current system should consider that Trump and his America First movement are actually the best thing that’s happened to them. We aren’t socialists. We believe in private property. We want you to keep your wealth. We just want everyone to have a piece of the action.

Furthermore, if we don’t prevail, another point of view—one a little less interested in private property and more interested in violence—might become ascendant. You can thank us later.

The way things are right now not only can’t go on, they won’t go on. The defenders of the status quo took their best shot on July 13 in Butler. And missed.

**************************************

SUPPORT CORNED BEEF CATHOLICISM

If you like the content here, the best way to help is to share and forward with like-minded people (and even a friendly adversary if they’re open-minded)

*Second, encourage people to subscribe. Our subscriptions here are free, so there’s no content behind a paywall.

I wrote a novel back in 2003 that was set in a fictional Irish Catholic neighborhood in postwar Boston. It’s still online at Amazon, in both print and electronic formats. The novel celebrates Catholic teaching, old-school populist politics (in an era when the Democratic Party was home to my kind of voter), the Boston Red Sox and Notre Dame football. In the worlds of faith, sports, and politics, it captures what I believe.

You can buy the book here:

I’ve also set up a “tip jar” over at the website Buy Me a Coffee. If you find an article or video particularly informative or enjoyable, you can leave an electronic tip.

Finally, while I’ve gotten active in politics because events of the last five years have shown that we have to protect ourselves, my first interest remains sports. I’ve got a nostalgia website, OUAT Sports, which is regularly updated with historical articles and includes a blog on current games. If you or someone you love is a sports fan, bookmark the site, and sign up for the free Substack associated with it.