“There are no solutions, there are only tradeoffs,” says the venerable Thomas Sowell, but “you try to get the best tradeoffs you can get, and that’s all you can hope for.”
Reasonably understood, Trump’s tariff agenda has always represented a tradeoff for Americans.
Despite an awful lot of misunderstanding of how tariffs function in both theory and practice that has proliferated in recent months, tariffs are not a solution that will magically increase wages for American workers or reshore American manufacturing without considerable costs, and most certainly, the tariffs were never going to be paid by the nations who hope to find buyers of their product in America.
Tariffs are indeed taxes upon the American people, despite some recent and confusing efforts to pretend that they are not.
As the Founders knew well, tariffs are a form of government revenue that is borne by taxpayers. When more money is taken by the government, there is a cost that is paid by someone.
It seems silly to even have to say it, but when a foreign product reaches an American port, there is no American tax collector demanding payment from China or wherever. The cost of the tariff is paid by the American manufacturer or distributor who purchased the product from overseas. The government extracts that revenue from the purchaser of the imported good, not from the seller.
The additional cost that is incurred by the manufacturer or distributor does not disappear. It appears as an additional cost in manufacturing and distribution of the product reaching consumers. The natural response to this, for any individual or corporation, is to pass these additional costs onward to consumers of the product. That is why tariffs are considered consumption taxes, much like a sales tax or an excise tax.
Now, none of this is to say that tariffs are always bad policy.
In fact, the Founders believed indirect taxation, like tariffs, to be preferential to direct or confiscatory taxation, which few among them would have ever imagined would exist in the nation that they created.
This is because tariffs create a natural effect of increasing costs of the goods consumed by Americans, restraining the federal government in its insatiable lust for power and revenue. In other words, for the federal government to continue collecting revenue, imports would need to be affordable enough for Americans to purchase them, which gives the government an incentive to keep these taxes at a reasonable level.
Today, we have the worst of both worlds. We have a confiscatory income tax which is among the most progressive on planet Earth, such that the top 10% of income earners (read: producers) in the American economy pay more than 70% of all income taxes confiscated by the federal government. Beyond that, the president has bypassed Congress to enact a tax policy which is arguably regressive in nature, given that expansive tariffs invariably lead to cost increases for poorer Americans who tend to buy a lot of imported stuff from Walmart and such.
Trump’s response to the first problem has been to suggest that the top 10% of income earners, who earn about $150,000 or more, are apparently not shouldering enough of the insatiable federal government appetite for money. And rather than paying just more than 70% of the income tax burden, he has argued that the top 10% of income earners should pay all of the income tax burden for the entire country.
That this policy proposition is so extreme and socialistic that it wouldn’t have the slightest prayer of being passed into law may be comforting, but a Republican president’s signifying his support for such an anti-liberty and uniquely discriminatory policy should be disturbing.
In regard to potential price increases that may result from his tariff policy (and, again, price increases are the natural result of increasing tariffs in a free market), Trump’s response was arguably worse. If Walmart decides to raise prices because of the government-imposed increased importation costs on the products sold, Trump had the following to say:
Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain. Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China, they should, as is said, “EAT THE TARIFFS,” and not charge the valued customers ANYTHING. I’ll be watching, and so will your customers!!!
Is this where we are, as conservatives? Telling companies that they earned way too much last year, and therefore should eat the cost of newly introduced government taxation?
What is the result of the thinly-veiled threat at the end of this Truth Social post? How is this different than Joe Biden telling Kroger that the real reason why the price of groceries is high is because Kroger makes too much money?
What is Walmart supposed to do? Walmart isn’t arbitrarily raising prices to gouge customers or something. If they were not actually incurring the costs prompting them to raise prices, then their competitors would be able to gain market share by not raising their own prices. As Pradheep J. Shanker of National Review points out on X, “Walmart is increasing prices because prices are increasing across the board.”
And it’s useless to argue against that point. Trump admits in his post that there is a cost to his tariffs, and that this cost should be “eaten” by Walmart.
This isn’t fun to observe any of this, I assure you. But in a way, Trump has crossed the Rubicon with this rhetoric, at least for me. I’m reminded of Hatton W. Sumners, a Democrat from Texas, who became disillusioned with FDR’s unconstitutional ambition to pack the Supreme Court with six new judges of his choosing in 1937. “Boys,” he said to his fellow congressmen, “here’s where I cash in my chips.” That seems to capture my feeling upon hearing all the extreme leftist rhetoric from the president that I voted for in the past three elections.
While I will remain ever hopeful for course correction, and while there are many successes to celebrate with the new Trump administration, most notably with his administration’s excellent border enforcement and foreign policy decisions, the cost-cutting by DOGE, and the utter decimation of DEI discrimination in the government and the culture, there is simply no way to support these unquestionably leftward pivots when it comes to economic policy.
Often, my honest criticism of Trump among friends has been met with questions about what the right solution would be.
But that’s the wrong question. To end as we began, there are no solutions, only tradeoffs. And the best tradeoff we can get seems incredibly obvious. It’s what drove much of the success of the Trump economy in 2017-2020, after all.
Since significant spending cuts seem out of the question, all that Trump and his Republican Congress should do is cut federal regulations and taxes — and particularly the business income tax (often called the corporate tax rate as a means of propaganda).
If you lower the cost of doing business in America, businesses will flock and investment will flow to produce and distribute goods in the United States, nearest to the most prosperous market of consumers in the entire world. None of this is rocket science, and how Trump seems to be getting it so epically wrong is a tragic missed opportunity to truly make America great again.
Image: Internet Archive, via Wikimedia Commons/Picryl // public domain
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