I saw this article by Auron MacIntyre defending the tariffs, “‘I, Pencil’ defined free trade — Trump’s tariffs are writing the sequel.” Even though I broadly agree with the author’s politics, this article is pretty bad.
He begins by likening the exploding Hezbollah walkie talkies to America’s reliance on Chinese imports for defense:
A shocking share of goods essential to U.S. national security are produced almost entirely in China — including antibiotics and components used in American military hardware. The idea that a country would rely on semiconductors from its primary geopolitical rival to launch a missile defies basic strategic logic. Yet that is exactly what the United States has done.
Tell me you’ve never worked in business or understand econ without telling me you have never done so. It’s called random inspection. If someone were selling defective goods it would be picked up by routine inspections of quality. This is all dictated by statistics. If a certain percentage of imported goods are sampled and some percentage are defective, then with a high degree of statistical conviction the total number of defective products and the defect rate can be ascertained.
But Israel didn’t manufacture the pagers that wound up in the hands of Hezbollah operatives. It simply accessed the supply chain and modified those devices. These weren’t weapons or advanced military systems. By tapping into the logistics of basic consumer electronics, Israel was able to inflict serious damage on its enemy.
Or the enemy’s failure to inspect the pagers at all…which was my first point.
Donald Trump has long argued that Americans are getting a raw deal in the current global economic system. While the United States has embraced free trade, many of our allies — including the United Kingdom, Canada, and Israel — have maintained protective tariffs.
It’s like, “Americans are getting ripped off by trade.” You know what else is a raw deal or rip off? Having your investments fall 20% in a month due to an unforced error. Who cares about creating some manufacturing jobs or ‘sticking one to China’ when tens of millions of Americans are collectively poorer. This sounds like a terrible deal or trade-off. This even assumes the tariffs will lead to meaningful job creation or re-shoring, which they likely won’t.
The stock market’s reaction is indicative of this. The collective market wisdom has assessed that the tariffs are overwhelmingly a net-negative. Trying to find an argument in support of tariffs by anyone credible is pure confirmation bias. It takes an impressive amount of arm-twisting of the data and mental gymnastics to try to make a pro-tariff case.
Trump has made clear that his goal is to reverse this imbalance. For both economic and national security reasons, he intends to use tariffs to secure better trade agreements and bring as much manufacturing as possible back to the United States.
This is again assumes that any of promised reshoring will happen, which it won’t. Companies are not going to invest in factories and other costly capital expenditures when they have no clarity. Instead, they will just wait for Trump to leave or for his policies to be overturned after people have lost enough money.
NeverTrump conservatives often dismiss the president’s trade agenda as outdated or uninformed. They mock his focus on reviving the American middle class. Among the D.C. elite, working- and middle-class Americans from “fly-over” states are often treated as relics of the past — easily replaced by foreign labor in a gig-based, service economy.
‘Middle America’ becoming much poorer as their investment accounts fall, inflation rises, and as companies downsize, isn’t helping Middle America either. It’s possible to think the tariffs are a bad idea without being a never-Trumper.
It’s not just elites who have investments and are losing money…it’s regular people. If anything, elites, by being so wealthy and having cushy jobs and other skills, are much better buttressed against the economic consequences of tariffs compared to regular people. Similar to 2008 and 2020, it’s gonna be all the low-skilled, average-IQ people first on the chopping block. If inflation gets worse, it will again be regular people hurt the worst.
Career politicians and policy-elites will just find consulting jobs or other gigs. Navarro will go back to teaching, as he has tenure and cannot be fired. Same for columnists. No columnist has ever lost his job for being wrong or pushing bad policy, whether it’s Covid lockdowns on the left or advocating for the Iraq War on the right.
In my article last week, I remain optimistic that the economic fallout of the tariffs will not be nearly as bad as feared, but still, it’s hard to make a case tariffs are good. The amount of wealth that has been lost in the stock market far exceeds any of the inflation that will be felt on consumers, indicative of an overreaction. But if I am wrong, it’s not going to be elites who are punished. It will be average people first.
Trump should instead focus on attacking wokeness in universities, affirmative action, credentialism, and DEI. Those are issues that help middle America, like not needing to go four years into debt for a piece of paper just to get a decent job. It’s middle America that is also saddled with the most student loan debt, too. Affirmative action and DEI are roadblocks to economic prosperity through inefficient capital allocation. This is something his base and even centrists can get behind , and it does not make people worse-off too.