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Notes -
This will be a dry post: I'm laying out my thoughts over the tariff discussions of the last few days as succinctly as I can.
Dangers to tariffs:
Economic/Political Benefits to tariffs:
Ideological benefits to tariffs:
Other thoughts:
If you are going to do protectionism, tariffs are better than subsidies.
Tariffs will change the relative cost of goods, but being a tax they should be net deflationary rather than inflationary.
Sanctions are like extreme "reverse" tariffs; if Russia and Iran are any example energy-rich countries seem to weather sanctions well.
Universal tariffs are
words that fail the antagonism rulenot a good policy fit for any reasonable goal. If you want a muscular government to intervene in the economy, actually do that. if you want to encourage manufacturing and defense production, if you want to downsize the parasitic financial economy, if you want good jobs for poor white Americans, if you want America to produce steel and ships (for shipping or the navy) and toasters and drones and nuclear power plants ... then actually do that. Subsidize specific industries. Do huge advance market commitments. Partner with a red state, eminent domain some land, rubber-stamp all the regulatory hurdles, and build those nuclear plants. Pick some startup CEO and replace the slow defense procurement process with "that guy decides". Ban imported Chinese products that infringe on domestic IP. Implement a 50% tax on hedge fund profits. Do the Yarvin where you just ban mass-produced shoes and clothing. Whatever. Those are the kind of policies that could, in principle, do the thing you want them to. One of them might even actually be a good idea. But there's an actual connection between the goal and the action, unlike with universal tariffs.The fundamental principle behind universal tariffs is "We need to do something. This is something [we can do]. Therefore, we need do this". Way in the past, when we didn't have computers or even telegraphs and governments were less powerful, tax collection was just a lot harder, and trade with foreign countries necessarily occurred at borders and especially ports, so tariffs were the government's biggest source of revenue, so the concept of tariffs got a lot of mindshare. Later, US Congress delegated tariff power to the President as a way to negotiate trade agreements after they passed the Smoot-Hawley Tariff Act and caused a trade war. So the right's thinking about it because we did it in the based old days, and Trump's thinking about it because it's a thing he can do without needing Congress. And, if you think about it a little, there are arguments for why it'd bring manufacturing back and increase lower class wages and such, it doesn't sound that implausible. (There are arguments for a lot of things.) So, in an intellectual environment where ideas aren't exactly rigorously scrutinized, "tariff everything" does very well.
(Or, Trump got a big beautiful red button that makes everyone, especially the libs, mad when he presses it. Of course he'll press it. Why reach for a more complicated explanation?)
The thing is, the 100 year old rusty tool you found in your grandfather's toolbox isn't the best choice to fix your Tesla, or your modern economy. If you're hoping the 50% tariffs on Vietnam will bring back those jobs for working class Americans, wages and gdp per capita there are less than a tenth of America's, and 1.5 is a lot less than 10. It'll make a difference on the margin, but it won't make Americans start buying clothing made of American cloth and put together by American hands. Universal tariffs are too blunt an instrument - tariffs large enough to actually bring all the jobs back would crush the economy, because it's currently deeply integrated with the outside world. And bringing back manufacturing wouldn't even bring back manufacturing employment. Americans don't want to work for Vietnam wages, but American robots will happily work at a total cost above Vietnam wages but below American wages.
"Yes-chad", I might say to all that. Yes, I want to destroy the degenerate, consumerist, metastasized economy. Yes, I don't want cheap garbage from foreign countries. America needs harsh medicine.
Even in that case, universal tariffs still aren't the right tool. If you want such radical change, you either need buy-in from the population because of the "democracy" thing, or something like regime change. In the former case, crashing the stock market and raising prices for the garbage everyone loves just doesn't sell! Peoples' jobs depend on particular economic arrangements, companies with specific suppliers and specific markets, and in current_year many of those suppliers and markets are in foreign countries, so huge universal tariffs that last for years means a lot of people will lose their jobs. People generally don't like that. Maybe with careful state management of a transition to something closer to autarky, people could be convinced. But universal tariffs don't do that, they're a sudden shock.
So, regime change. The thing about regime change is you need a lot more support than you do to do things through the normal democratic process. Often but not necessarily from the masses, but certainly from some people. Universal tariffs destroys elite buy-in, because you're nuking their stocks and businesses. It's the kind of thing you need to do after the coup, not before it. And once you get to absolute public policy, you can hopefully more directly pursue your desired outcome.
Targeted tariffs aren't as dumb as universal tariffs. America really should make chips, and ships, in America. But if even the Jones Act isn't enough to make America build American ships, moderate tariffs probably won't be either.
One recent point of hilarity is that while there's been a movement of people on the left taking onboard traditional right-wing critiques of left-wing economic policy, there's also been a surge of right-wingers adopting what are essentially leftist degrowth arguments with a trad gloss.
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