Except in true cases of retaliation, tariffs are generally a bad idea for all the reasons cited.
In this case, Trump is saying that tariffs will eventually lead to increased domestic production capacity, employment in manufacturing jobs, payrolls, etc., etc.
Three problems with that.
First, we don't have the organic domestic growth to absorb a bunch of increased production capacity. Plus, he's making it harder to immigrate. We need immigrants for growth to drive a whole lot of things, and he's choking it off. As I've said before in multiple threads, we need controlled immigration. Neither a wall nor open borders are the answer.
Second, tariffs isolate domestic production from competition, leading to higher prices and lower quality production. The consumer takes it on the chin. Look no further than the auto industry of the 1970s for instruction.
I'm not saying that Reagan's rollback of tariffs was the only driver of the expansion of the 1980s and 1990s. There were other drivers as well. But it's no coincidence that rollback of tariffs preceded that expansion.
Third, I don't believe for a nano-second that Trump really believes what he's saying about increased production capacity and the resulting positive fallout. I think he's doing it strictly for the feeling of personal power it gives him. He couldn't care less about what he's doing to the economy or the financial markets.
While Trump can enact tariffs without anyone's consent, I'm wondering if Congress can enact rebates of tariffs, essentially making them a net zero.
Of course, it would have to be over Trump's veto. But if the populace screams loud enough, Congress might be able to get 2/3 of both houses on board.
Even if that's a pipe dream (and it probably is), it'd still be fun to poke that bear.
Late Add: There's a fourth problem with tariffs, and I can't believe I left it out of the original post. Other countries don't just meekly accept them. They fight back with retaliatory tariffs. Which raise the prices of American goods in their markets, which makes American stuff less attractive in those markets. Which means that Americans don't sell as much stuff. Which undermines the idea that tariffs will eventually lead to expansion of American production capacity, payrolls, etc., etc.
It's the dumbest economic move I've ever seen.
