The Deal with Tariffs

Over the course of President Trump’s two terms, there has been much talk around the matter of tariffs — taxes on imported goods. However, much of the talk seems to miss the point. After all, for those of us who seek the truth, it’s not really a question of whether tariffs are ‘good’ but whether they are preferable to other kinds of taxes — assuming, of course, that taxes are the rule, as certain as the eventuality of death.

First, let’s establish the theory: beyond the generic purpose of revenue generation for the state, the institution of tariffs ordinarily serves to reduce (or discourage) imports by making them artificially more expensive, while encouraging domestic production by making domestic products more appealing on a relative price basis. In the realm of foreign affairs, tariffs are instituted or threatened in the course of international trade negotiations in order to signal dissatisfaction with existing trade barriers and to push for more favorable trade terms; or in order to express disapproval of political decisions; or in an effort to shore up accounts or reduce deficits with the aim of positive net exports; or in order to ‘protect’ industry deemed integral to the continued defense and economic stability of the country. Indeed, the latter represents the principal political justification in most cases, at least so far as the tariffs relate to domestic affairs. Indeed, the advantage through tariffs is believed to be in the ‘protection’ of jobs and strategically-important industries: industries significant to domestic defense (or, more accurately, the military-industrial complex and the war agenda) and industries on which the people must be able to depend without question for their survival, and for the general stability of the economy. Of course, the latter introduces some measure of subjectivity, and some aspects of contrivance, especially in an economy whose measured output is largely “based” on consumption, services, and government spending, and whose citizens are held to labor (and depend on their every paycheck) not just so that they can continue to make ends meet (where consumer prices are always heading higher, and consistently outstripping any increase in wages, as part of official government policy), but so that they can continue to meet their ongoing tax obligations in order to stay out of legal trouble, to avoid incurring penalties, and to keep from losing their homes.

Apart from the oft-overlooked moral transgressions attending taxation and government profligacy — transgressions which must necessarily be offset with ‘protections’ for citizens to continue reliably meeting the obligations heaped upon them — there are the various strategic considerations related to the subject of tariffs: where too much foreign control over resources and industry threatens the military might and the general economic stability of the country (in the event that foreign politicians suddenly decide to disrupt trade), and where domestic interventions, ‘regulations’ and artificial obstacles to entry render domestic industry less competitive (and, thus, foreign industry more economically viable, more attractive for investment, and more influential in socioeconomic affairs), tariffs can theoretically offer ‘protection’. And where foreign marketshare often threatens to undercut domestic industry through the benefit of subsidies, whereby the attending consequences of unemployment heap heavy systemic costs upon the economy through the welfare state, that ‘protection’ is not just strategic in the preservation of the economic substrate and the military-industrial complex, and not merely political just for the sake of citable statistics and lobbied interests; in a twisted way, indeed a form of blackmail, it is a sort of ‘protection’ against an expanded welfare state which is automatically triggered in the case of systemic economic shocks, whose expansion threatens a whole host of additional costs, complications, and ripple effects — to be borne, no less, by an economy progressively ill-equipped to manage them. And to the extent that domestic industry is destroyed in the process, it is extremely hard to bring it back, even where the ‘protections’ are in place to encourage it; it comes at great expense (i.e. training, capital, and equipment) and with real risks and opportunity costs that discourage investment (where the political landscape can change in short order), and it takes a considerable amount of time, administrative work, research and development — considering that, where the industry has collapsed, the machinery is subject to decay or being sold off, the workers have died, retired, retrained, or relocated, the skills have been lost or abandoned, and considering that it often takes decades to assemble a highly functioning team and to get an efficient (just-in-time or Six Sigma) supply chain in place, and (in view of risks) considering that a changing of the political guard can quickly alter the prospects and profitability of business, where political conditions can change in short order and where economic policy often artificially buoys alternative investments that often not only offer the advantage of safer returns but the benefit of being less labor-intensive. It is in just this way — that combination of onerous ‘regulations’ (whether through government or self-imposed by unions) and the material influence of foreign industry — that the domestic economy suffers a hollowing out of its manufacturing, and that creative skills and once-productive human capital go to waste, in the degradation of not only society but the creative legacies that are otherwise passed down between generations. It is in just the same way that America’s Rust Belt has suffered so profoundly, and for so long, in the way of economic and social decay: persistent poverty, drug addiction, divorce, “deaths of despair”, poor mental and physical health, with the rise of broken families (i.e. declines in marriage rates and two-parent households) and growing family instability connected to lower academic achievement, poor mental and physical health, and intergenerational poverty. And the latter brings about a growing segment of society lacking in the skills, initiative, and ambition necessary to succeed, and thus a population less conducive to industry than to the expansion of government, on which that population comes to depend, and whose initiatives they come to embrace at the further detriment of the working class, economic opportunity and domestic industry — or at least those industries not enjoying the political protection of the ruling class. Thus, the case for ‘protections’ is initially not without its merits, but as shown it is also not without its complications — after all, tariffs are among the last political instruments by which a people can preserve their independence, their industry, and their way of life, but they are also among the instruments capable of bringing about cultural and economic destruction.

Indeed, the matter of ‘protections’ isn’t without problems, and the ‘protections’ themselves present their own risks. The very concept of tariffs in practice operates from a whole litany of unstated and unproven assumptions, including but not limited to: (1) whether politicians (in the first place) can be trusted to clearly identify a ‘problem’, given their history of imagining and manufacturing them, and (where real problems do exist) their role in all too often causing, enabling or subsidizing the problems to begin with; (2) whether they can exercise enough restraint to remain objectively focused, to refrain from implementing tariffs higher than mathematically necessary, and to abstain from implementing still further ‘regulations’ or ‘programs’ that increase the burdens to domestic producers or consumers; (3) whether they can be trusted to administer a remedy without causing further damage or other problems, and whether their models and methodologies are honest, transparent, and sound; (4) whether those in power have the capacity to offer ‘protection’ on the basis of ‘need’ (however defined) instead of special interest or political expedience; (5) whether they have the ability to objectively define the criteria and the parameters for identifying industries eligible for ‘protection’; (6) whether they have the ability to precisely establish quotas or prices so that the ‘protections’ are neither too weak (as to be ineffectual) nor too onerous (as to be punitive); (7) whether they have the ability to strictly limit the list of industries ‘protected’ in the interest of domestic security and general economic stability, without the tariff system (initially or eventually) being weaponized politically between factions or interests, or otherwise overwhelmed by political expedience and busybodies lobbying for more privileges or ‘protections’; (8) whether they have the ability to gauge and remedy failures, unforeseen externalities, and instances of abuse; (9) whether they can reliably calculate the extent to which tariffs will burden or complicate domestic industry (through logistics challenges and higher input costs), and whether measures will be implemented to take immediate action where abuses happen, where trade wars (including retaliatory tariffs, debt repudiations, boycotts, sanctions, embargoes, or generally hostile sentiments) escalate to the net detriment of the domestic economy, or where they compromise the people’s safety or security, or where the results of the tariffs are shown to be poor, ineffective, or too onerous to justify their continuation, or where the ‘justification’ is maintained merely as pretext for the benefit of profiteers; and (10) whether those at the head of the ‘protected’ industries can reasonably be expected to do the ‘right’ thing, as opposed to exploiting public policy for personal gain without doing their “patriotic duty” in return.

After all, it is because of a vague sense of “patriotic duty” that this ‘protection’ is extended to domestic producers while consumers are expected to shoulder the added burdens passed on to them in the form of tariffs — burdens not limited to higher prices, lower quality, fewer options and thus a reduction in the freedom of choice.

However, the select industries enjoying that ‘protection’ rarely reciprocate in honoring that privilege — which disproportionately affects middle- to low-income consumers, relative to their incomes — by returning the favor through improvements in quality or lower prices in the future. History has instead provided examples of artificial scarcity, efforts aimed at keeping prices elevated and supply off the market — even going so far, as in the case of the Great Depression, to destroy produce and keep it from coming to market, labeling abundance a burden and instituting measures called “crop control” whereby farmers are paid not to plant. Indeed, it was just this end sought by the Agriculture Adjustment Act under President Franklin D. Roosevelt’s ‘New Deal’: to bolster farm income by ordering crops plowed under, and millions of acres of wheat, cotton, and corn left unplanted, all while Americans across the country were left hungry.

Despite the historical record, it is merely assumed that those at the head of domestic industry will always do the right thing in response to these measures, or that the ‘jobs’ created or ‘protected’ suffice to uphold their end of the bargain — forgetting the jobs and opportunities destroyed in the process, and forgetting the monopoly power and the attending socioeconomic influence wielded (as a consequence of that enforced monopoly) against domestic consumers and a domestic labor force shrinking in power and influence in proportion to the elimination of alternatives.

Of course, in practice, these measures have the effect of eliminating competition and hampering supply, increasing costs and keeping them higher, reducing quality and disincentivizing improvements, stifling business prospects for smaller or fledgling enterprises, and preventing the allocation of labor and resources to more efficient ends that might otherwise result in innovation, economic expansion and new industries. The latter detail in this case is especially critical for a country in the midst of a sovereign debt crisis, relying on its maintenance of that illusion of an expanding economy capable of servicing its debts; a country no less susceptible to selling out entirely for the benefit of both empty government promises and cheap imported goods.

Therefore, to the extent that cheaper imported goods enable higher purchasing power for users and consumers, it is imperative to inquire into (1) whether the marginal price difference comes with cumulated risks to economic stability, (2) whether the financial advantages suffice to offset any said risks, (3) whether the benefits to consumers and businesses in the form of lower input prices threaten to maintain a toxic dependency upon foreign suppliers, and (4) whether the businesses and industries spawned or sustained by this kind of relationship constitute fulfilling work that promotes or expresses the values prized within the culture or by the workers themselves, or whether the workers are merely adjusting to changing economic circumstances and settling for the kind of work available that meets their bare financial demands. The latter scenario speaks to the actual merit to the statistics around second-order jobs creation and business developments that come from the inflow of cheaper imported goods, and from the savings thereby freed up. If those jobs and businesses are not replacing the economic productivity lost to foreign competition, if they stand to be profitable only in the short run, or if their end products, trades or services in themselves carry little to no value to the people within their own culture, or if the work is done in support of a company or corporation operating under hostile leadership or advertising ideas counter to the domestic culture, then the benefits (realized or projected) probably do not justify the sacrifice of domestic industry — considering not just the long-term economic implications but also the intangibles of pride and heritage, as well as the creative legacies, contained within a self-reliant and industrious people. This caution is especially relevant where unsustainable debt has altered price signals and the balance of international trade, enabling cheap imports along with the outsourcing of industry that will eventually need to be reclaimed when the principal of the debt finally comes due, as creditors lose confidence in the unit of account and bring a halt to the revolving door of easy credit and cheap imported goods. This is especially so in the case of the United States dollar, where the exorbitant privilege of remaining the world’s reserve currency has for decades artificially distorted prices and the balance of trade in favor of American consumers: people who have since lost their way in matters of faith, legacy, and honest living, who — completely consumed by materialism, money matters, and a growing sense of entitlement — care little about preserving the abstract relics of culture where ephemeral economic advantages can be enjoyed instead; a people addicted to cheap goods and easy credit who, as the phrase goes, know the price of everything but the value of nothing.

Despite their dubious effectiveness in contributing to some patriotic cause or promoting the ‘general welfare’ — especially in a country becoming progressively weaker in its sense of community, morality and patriotism, and ever more wildly confused in its quagmire of disparate cultures — tariffs are still a far more efficient tax mechanism than any tax on productive activity or capital formation. So, to the extent that the state must generate tax revenue, it is best generated through that mechanism which discourages spending and which is generally avoidable: the first of these is part of sound economics; the second is based in the same, as well as good morals. After all, if the state must tax, then, as Adam Smith cautions in his 1776 treatise The Wealth of Nations, it should altogether exempt “the necessities of life”, or otherwise (to the extent absolutely necessary) they should be “taxed very lightly.” As for “articles of luxury, on the other hand,” Smith states that they “may very properly be taxed.” As a matter of good practice and sound ethics, to the extent that taxes are to be collected, let them be assessed where they are most likely to mitigate suffering and most likely to respect life, liberty, and property: first through customs on imported consumer goods, then (and only then) through excise taxes on luxury goods, then (and only then) through sales taxes; avoiding altogether taxes on property, productivity and capital, ensuring in every case that the form of tax is supported by the Constitution, that each is assessed equitably as to avoid disproportionate impact, and that each is collected locally as to ensure accountability to the people and interests represented.

In sum, so far as they are to be suffered, the tax which is best is that which taxes least: that which taxes the least in total and which has least affect on life, liberty, property, and productivity. Thus, compared to other more destructive taxes, such as those on property and productivity, wherever taxes are to be collected, let them be collected where they discourage consumption rather than production; let them be collected in such a manner that they are avoidable, that they stand (at the given cost) to at least offer some strategic economic advantage (on the whole) to domestic suppliers and dependable manufacturers. Let them be assessed on trade with those who threaten or do not share in our values, those whose sociopolitical affairs (i.e. Mexico’s cartels, drug trafficking, and illegal immigration into America) threaten the safety and security of American citizens, and those who are hostile to Americans, American trade, or American values. Let that cost be made obvious in the price of imported goods so that there is no ambiguity about the cost of government. Let it constitute the lion’s share of tax receipts, as it did for the entirety of American history up until the time of the world wars of the twentieth century.

Let the cost of government be made transparent; let it be covered in every case as to mitigate the plight to futurity, where the alternative has too often meant a plight heightened by a growing and intractable public debt, which in rolling over threatens to topple the very pillars of “just government”: “the consent of the governed”. 

As stated in Death by Socialism, “The government funded through debt is more disconnected from the public which it purports to represent. It is thereby less accountable to the limitations imposed and grievances expressed by the people as the state inflicts untold suffering on a public neither present in the negotiations nor represented by their government. In this way, a government becomes progressively more audacious and undeterred, seemingly unstoppable because of the creditors who temporarily let them off the hook.” 

Just as insidious is that particular kind of debt owed to foreign creditors, that policy in direct contradiction with the case for tariffs; that policy exposing the country’s social, political, and economic future to external factors — the policies and decisions of foreign actors. As stated in Death by Socialism, “It is in this way that government is rendered beholden not to the public and their compact, but to the lenders who expect their compensation. In other words, the state is limited by its power over its creditors, whether foreign or domestic, regardless of the foundations of its constitution.” In any event, this is just one of the many cases in which the unrepresented are affected, the country’s interests are compromised, and ultimately the stated policies of government are in conflict with their stated intentions.

The practical questions pertaining to international trade are thus: to what extent are any people anywhere willing to permit to foreign trading partners (and potential adversaries) the synergies of competitive advantage enjoyed through exchange, and to what extent can a country tolerate the tradeoffs, so far as they affect domestic industry, before that country suffers in the way of sacrificing its culture and its identity? Indeed, these are not just significant considerations in the aftermath; they are at the core of assumptions for any tariff’s justified institution among a people. Beyond their economic and strategic justifications, tariffs are often grounded in this unspoken cultural impulse — a desire to preserve a people’s way of life within their own jurisdiction. Commerce, after all, is not just the exchange of goods but of values, habits, and dependencies. When a society relinquishes its productive capacity to others, it also yields the habits of mind, the crafts, and the local institutions that once defined its identity. Thus, beneath the official rhetoric of “protecting jobs” or “supporting industry,” tariffs often serve as a form of cultural preservation — a mechanism by which a country seeks to maintain continuity of its character, traditions, and independence. Short of acknowledging this, the discussion of tariffs becomes mechanical and dehumanized, severed from the moral and social realities that give economic life its meaning. 

Likewise, these are other questions demanding answers: to what extent are any people willing to outsource the functions on which the domestic economy — the very livelihoods of individuals (and industries) in their specialized professions — comes to develop and depend? To what extent can any civilization tolerate the risks posed by this kind of arrangement whereby its security, as well as its economic and social stability, depends on the continued maintenance of tenuous foreign relations (relations relying on foreign merchants and manufacturers beyond one’s own political jurisdiction, subject to their own political and economic conditions)? Finally, are there any unresolved domestic restrictions that have caused or exacerbated competitive disadvantage, or are there any restrictions, moral hazards, or policies that threaten to combine with tariffs to bring about results unfavorable to the domestic economy and the people as a whole? And are there any feasible alternatives to tariffs (i.e. deregulation or cuts to government spending) that might better serve the ends of protecting the domestic economy and promoting harmony between nations? And let us not forget this critical consideration: as for the ‘adversaries’ (or potential ‘adversaries’), it is pertinent to consider the questions — whose adversaries are they, and whom and what interests do they really threaten? Additionally, among those who stand to benefit from the ‘protections’ ultimately enforced through the barrel of a gun — that is, by government — what evidence do we have that they are truly our allies, and what assurances do we have that they will honor this privilege in good faith? These are just a few of the basic questions that must be answered in an honest assessment of any policy proposal on the matter of tariffs or international trade.

It is also imperative to bear in mind the fact that tariffs can serve as a sort of weapon, especially where they serve to disrupt trade on which people (and even entire economies) rely. In that sense, tariffs can serve, and have historically served, not only as political tools but weapons of war, albeit discreet weapons capable of weakening a population, crippling commerce, and wreaking havoc on civilization.

The case of the Morrill Tariff offers one such example whereby ‘protectionism’ for the specific benefit of one party or region domestically, Northern industry, came at the expense of another, the agrarian Southern economy in its greater reliance upon imported goods. The Morrill Tariff of 1861 is an example of domestic economic ‘protections’ that disproportionately harm one specific group for the benefit of another; it is also an example of how differences between groups domestically may actually make foreign trading partners more appealing, not only on the basis of economics but also on the basis of shared interests or values — interests and values that aren’t necessarily shared by a people just because they inhabit the same country or political jurisdiction.

As for the given purpose of tariffs, at least as measured by the stated intentions of those championing them, where they serve to raise revenue, they mustn’t be too high; where they are too high, they may serve to ‘protect’ specific interests, but they will simply discourage imports and thereby fail to raise any revenue at all. Of course, they will also raise costs to producers and consumers alike, with little to no compensation for their sacrifice where the people were promised a break in the form of other taxes. Alas, this is precisely how the American people were conned into accepting a federal income tax: it was said that the tax would apply exclusively to the highest of earners and that it would replace the onerous tariffs on imported goods that disproportionately affect those of lower income. Of course, once the federal government got its foot in the door with the federal income tax (during World War II, no less, under the so-called “Victory” tax), it was only a matter of time before the ordinary worker was subject to it; and, lo and behold, the federal government eventually reinstated the tariffs anyway. So much for the “protections”, promises, and stated intentions of government.

As for the whole tariff debacle, it is, realistically speaking, a distraction from the far greater socioeconomic crises facing the United States — a country mired in debt and in the midst of both an ongoing culture war and a serious identity crisis; as for confronting these kinds of crises, and as for the odds of people discovering for themselves the tragic histories and real costs of tariffs and other such impositions, the journalist Walter Lippman put it this way: “Men may have to pass through a terrible ordeal before they find again the central truths they have forgotten.” This extends to the matter of tariffs, of course, but principally to the matter of excessive government and the social calamities yet unresolved. Consider the grave consequences of war by economic policy; consider that sequence of economic events that culminated not just in the exhaustion of incredible sums of wealth but in untold suffering and unspeakable losses of life. Jonathan Horn described one such sequence of events in his 2025 work The Fate of the Generals: “When the United States tried its hand at deterrence by placing its Pacific fleet at the naval base it had built at Pearl Harbor and by issuing an embargo on some of the raw materials essential to the Japanese military, Japan tried its own policy of deterrence by signing a defensive pact with Germany and Italy. America answered with additional sanctions, Japan with additional aggressions. When the Japanese occupied French Indochina in July 1941, the United States made it impossible for the Japanese to buy the one commodity their military needed most: oil. Both powers now felt under siege: the Japanese economically, the United States geographically with hostile forces on the verge of encircling the Philippines.” The results of this vicious retaliatory cycle: thousands killed in the Japanese attack on Pearl Harbor, and millions of deaths, civilian and military, in the Pacific theater in over three brutal years of war between the United States and Japan.

With this in mind, the most urgent questions are not whether tariffs are ‘good’ or ‘bad’ but whether we can count on them being something other than just another tax, or just another measure on a timeline toward war; whether, in practice, they will succeed in shrinking trade deficits and in helping to realize the goal of positive net exports, for the sake of making headway against the public debt and for the sake of restoring balance in both the budget and government’s accountability to the governed; whether they will generate enough revenue in practice to help balance budgets and offset more onerous taxes; whether the vision for the ‘new economy’ justifies, accounts for, and can suffer the risks of a contracting economy in the midst of a sovereign debt crisis; whether restructuring the domestic economy toward greater ‘self-reliance’ is worth the costs; and (to the extent that tariffs succeed in generating that revenue, and to the extent that they are essentially unavoidable) whether middle- and lower-class Americans, already heavily taxed, buried in debt and totally consumed by a kind of hedonistic materialism, can even afford them or otherwise personally justify sacrificing or cutting back for something as abstract as a more stable and self-reliant future. The latter consideration is especially relevant, given that so many Americans are ‘American’ in name only: they don’t know their country’s history, they didn’t grow up in America or with a respect for American values, or they didn’t grow up with an appreciation for what it means to be an American. In other cases, they have either already dispensed with their heritage or have otherwise come to condemn it, in which case they, too, aren’t really even ‘Americans’ anymore either; and so (as they see it) the ideas of ‘self-reliance’ and putting “America first” are not just gratuitous but ‘bigoted’ or beyond incomprehensible. This is why the protections on liberty are so important, so far as protections go: so that this kind of ignorance isn’t met with the power of the state, where ignorance combines with evil, corruption, and the resources to become a veritable weapon of terror and mass destruction. So, in ‘protecting’ American industry, it is essential to know precisely what and whom the legislation is ‘protecting’, and whether the ‘protections’ are giving aid and comfort to enemies within, or whether they will, in truth, serve to “Make America Great Again”.