On April 2nd, 2025, President Trump exercised executive authority in issuing what could be the most sweeping American tariffs since 1930.
While watching markets plunge on the following day, he quipped that the “operation is complete! The patient has survived and is on the mend.” However, history suggests that tariff implementation is not an event, but a process.
In June of 1930, President Herbert Hoover signed the infamous Smoot-Hawley tariff bill.
As it was signed by a Republican with a large Republican majority in Congress, Democrats have not been compelled to defend it as they do FDR’s horrendous central planning and his socialistic New Deal policies which arguably extended the Depression by several years.
And naturally, several more contemporary free market Republican economists such as Milton Friedman and Thomas Sowell would all agree with Democrats that the Smoot-Hawley tariffs were economically destructive and played a vital role in making the 1930 depression a decade-long Great one.
If the reduction of trade deficits is the aim of protectionist tariffs, Smoot-Hawley was a smashing success. America enjoyed a trade surplus for most of the 1930s, as international trade declined because of the trade barriers that were erected during the trade war that ensued early in the decade.
There were warnings, of course. A month prior to the Smoot-Hawley bill being signed, 1,028 economists “signed an open letter urging the president to veto the tariff legislation,” writes Amity Shlaes in her excellent history of the Great Depression, The Forgotten Man.
The “language of their protest was strong,” she writes, quoting the economists’ letter:
We are convinced that increased restrictive duties would be a mistake. They would operate, in general, to increase prices which domestic consumers would have to pay. By raising prices they would encourage concerns with higher costs to undertake production, thus compelling the consumer to subsidize waste and inefficiency in the industry.
These economists also predicted that “many countries would go on to pay us back in kind.”
History has proven that they could not have been more correct, and there are few on either side of the political divide who could argue otherwise.
Today, whether you think that tariffs are economically harmful or you think they’re economic gold, the central point made by those economists is the unequivocable truth.
There is an unquestionable tradeoff when it comes to tariffs. You can either accept that this tradeoff exists and defend them on those grounds, or you can be deceitful and deny that this tradeoff exists while arguing that tariffs are some sort of magical solution for all of America’s economic woes.
Tariffs are indeed harmful to countries who produce and export products to our country, because Americans are less likely to buy those countries’ products due to artificial increases in the price tags via tariffs. A sale that is never made is revenue that is never earned by those other countries, after all.
Simultaneously, tariffs will invariably “increase prices for domestic consumers” by reducing price competition from foreign producers, “compel[ling] consumers” to “subsidize waste and inefficiency” in our own country’s industries.
This is simply fact, and as such, tariffs can be justified by only three valid arguments.
The first is that tariffs, though mutually harmful to parties involved, are more harmful to our political adversaries, and can thus be used as political leverage. That is a valid argument for, perhaps, a tariff on Chinese steel imports, which would be comparable to sanctions or an embargo.
The second argument is that tariffs, though mutually harmful to parties involved, can be used as a means of reciprocal action to lower trade barriers. Our own tariffs would be a response to tariffs against America, and this would “level the playing field” when it comes to trade, and might induce other countries to lower their trade barriers in response.
This is most likely the idea which brought many conservatives to the MAGA movement, because the reduction of trade barriers promotes the efficiency and prosperity that the expansion of free-markets provides.
The third is a different argument. It’s that, despite the fact that tariffs are mutually harmful to parties involved, American consumers should be willing to endure the higher costs of domestic production in order to “subsidize waste and inefficiency” in American industry, because the tradeoff is that more Americans would have jobs at higher pay.
I would agree with the use of tariffs for the first two purposes, and though I’d generally disagree with the third argument as a matter of economic principle, I am at least moved by the patriotic sentiment involved.
Where MAGA purists lose me is in the dishonest argument that price increases are somehow not the natural result of tariffs, and that the arbitrary imposition of tariffs somehow wouldn’t mean that consumers would be subsidizing higher labor and production costs as a result of the tariffs. As more than one-thousand economists correctly pointed out in 1930 while begging Hoover not to fan the flames of a looming depression — that’s precisely what tariffs do.
America’s manufacturers seem to get this.
The National Association of Manufacturers President, Jay Timmons, said in a statement that the “announcement was complicated,” continuing to say that the “high costs of new tariffs threaten investment, jobs, supply chains, and, in turn, America’s ability to outcompete other nations and lead as the preeminent manufacturing superpower.”
But as manufacturers are “scrambling to determine the exact implications for their operations,” according to Timmons, President Trump has issued an ultimatum to auto manufacturers in the wake of a 25% tariff on auto imports, telling them that they’d “better not” raise their prices in response to them.
The United Auto Workers Union (UAW), an organization that is so renowned for its inefficiency in competitive markets that it almost single-handedly destroyed General Motors before causing its dissolution and taxpayer-funded resuscitation in 2009, was thrilled with Trump’s tariffs.
And it’s not hard to imagine why. They’re newcomers to the Republican tent, having supported Democrats since the 1930s. And I can assure you – the UAW doesn’t like the tariffs because they are economic leverage against adversaries or that they’ll lead to freer trade and more robust competition — they love Trump’s tariffs because they read them to be protectionist policy which eliminates foreign competition in industry and benefits auto workers at the increased expense of American consumers.
Now, to be clear, I am a Trump supporter who voted for him three times. It is precisely because I desperately want him to succeed that I want him and his advisors to understand that their passion to swiftly pursue this course of action may completely derail every other policy ambition to Make America Great Again by empowering American citizens and businesses by deregulating our lives, enforcing our federal borders and laws, eliminating bloat and corruption in the federal government, and defeating the woke DEI-LGBTQIA+ cult.
But it seems that MAGA is caught up in the euphoria of the recent win, and can’t imagine that Americans may rip the mandate from their hands as swiftly and decisively as it was granted.
The first issue is one that any moderate Democrat, Independent, or conservative might understand, given the fact that this sweeping action was accomplished unilaterally and without Congress.
Herbert Hoover may have signed the Smoot-Hawley tariff bill, but he was simply signifying consent to an act of Congress.
That is appropriate, because Congress is assigned the task of setting tax legislation in Article I of the Constitution. Tariffs are taxes, to be sure, and the design and implementation of those taxes are the province of Congress.
Trump has opened himself to accusations of abusing his power. Congress did grant the executive branch emergency powers to implement tariffs in the mid-20th century, but implementing new tariffs on the European Union while clearly signifying that the reason is a trade imbalance, or their “ripping us off,” would arguably not qualify as a national security risk except in the loosest of definitions.
But the biggest issue is the fact that Trump’s tariff edicts are not as enduring as an act of Congress would be.
There is nothing “sticky” about these tariffs, as there was with, say, the corporate tax cut of 2017 which repatriated billions in manufacturing and caused an economic boom because companies were given the assurance of at least 10 years of favorable taxation.
As the Senior Writer at Barron’s, Tae Kim, writes at X:
Why would any U.S. Company spend billions for domestic capacity that won’t come online for three to four years with these Executive order tariffs are effectively temporary if the next President revokes them?
Since the factory building is unlikely to happen, all the tariffs do is cause enormous pain and suffering to businesses and consumers, driving higher inflation and prices.
In 2024, Americans loudly signaled that they will not tolerate higher inflation and higher prices, and it’s difficult to imagine that they’ll be receptive to the idea that they should just trust the process and endure the pain of higher prices for a while as the Trump team sorts things out.
But hey, if trade barriers broadly come down as a result of all this, I’ll gladly eat my share of crow.
What I don’t want to do is to helplessly watch all the promising potential of the MAGA movement to be squandered in 2026 and 2028 because economically destructive and protectionist tariff policy that are known to be economically destructive were simply too alluring to for our populist president and his brains trust to resist.
Image: Metropolitan Museum of Art, via Picryl // public domain
Jesus Christ is King
Comments are closed.