Yup of arrows. Thanks for the correction on the Vertigo ending. Yes, that does make more sense. And it seems that Hitchcock successfully fended up the demand, along with other demands that the film be made "less erotic."
Tariffs, like gun control, sound good. To realize they area actually bad takes work and understanding, which most people aren't willing to do -- nor should they do unless they are policy makers.
Lots of countries are still authoritarian dictatorships, but that doesn't mean that the U.S.'s unique democratic republic is a bad idea.
There is a game-theoretic judgment for reciprocal tariffs. A mechanical rule that says, "America will apply the same tariff rate on Country X that Country X imposes on America. The problem is that they're never handled as cleanly and neatly and dispassionately as the game-theoretic ideal would suggest.
Well, game theory, and specifically the Prisoner's Dilemma, offer a possible reason why so many countries impose tariffs. And also a failure to understand the second- and third-round effects.
As shown by Trump's recent actions with Colombia, Mexico, and Canada, tariffs--or the threat of them--can be a useful tool. Through most of our history, they have been a tool for protecting a country's industries. And many countries are more restrictive of trade than we are--try selling American-made cheese in France! If "free trade" is only working in one direction, then it's not really free trade.
However, in the cases mentioned (Colombia, Canada, and Mexico) the threats actually accomplished nothing (other than pissing off allies). Colombia already had an agreement to take deportees negotiated by the Biden administration (did you know Biden deported more undocumented immigrants in his term than Trump did in his first term), but it required that Colombia be notified the flight was coming, and that the deportees be treated humanely (not manacled) on board. The first Trump flights were unannounced military flights with the deportees manacled, and they were turned away. After the threat of tariffs, on the cell phone call the Colombian President reminded Trump of the negotiated conditions and Trump agreed to abide by those conditions in the future. Deportation flights have resumed in accordance with the Biden negotiated conditions. Similarly, Mexico had negotiated with Biden in 2021 to have Mexico station 10,000 troops at the Border (they actually have 15,000 there). After the tariff threats Trump backed down in exchange for the same promise of 10,000 troop negotiated with Biden and all ready more than in effect. Canada announced a border security upgrade of $1.3B coordinated with the Biden administration in December. After the tariff threat Trudeau negotiated with Trump to implement that exact same border security plan already passed and funded by the Canadian parliament and coordinated with Biden (a border security plan mostly focused on keeping out drugs, guns, and criminals crossing from the US to Canada not the other direction, by the way). So much for the great deal maker.
As noted in another comment here, I'm an agnostic on whether the threat of tariffs accomplished anything useful in these three cases. I don't dismiss the possibility outright, but neither do I buy the administration's flag-waving.
As for your question "Did you know Biden deported more undocumented immigrants in his term than Trump did in his first term?" A critic of you point would have an obvious response: "It's kind of like someone neck-deep in water in Western Carolina last year asking, 'Did you know more water drained OUT of this valley THIS week than LAST week?' It's the net flows that matter, not the gross."
Verdict is out. Possibility is there, but claims of accomplishments and actual accomplishments are two different things. And like most mechanical contrivances, threats of tariffs tend to depreciate in value over time.
I’m not an economist nor do I play one on TV, but I think the most likely explanation is a combination of D and F. Tariffs give him the opportunity to combine his two favorite things — trolling the left and throwing his weight around the world’s stage — into one action. Win for him and his MAGA followers!
But this is Trump we’re talking about here. He’s like Forrest Gump’s box of chocolates: You never know what you’re going to get.
I suspect (but only suspect) that it's A, C, D, E, and F. And it wouldn't surprise me to learn that the relative importance of each theory comes and goes over time--perhaps abruptly. As for B, I'm confident that Trump has not read Johnson and Bhagwati and has not devised any algebraic proofs.
Robert, you have in this article exceeded even my extraordinarily high expectations. You have written in an entertaining, creative, and massively informative way all that can be said and should be said about Trump's notions and pronouncements and actions (so far) about tariffs. If there were a way, I would have this article in the minds of all people who are thinking and writing about tariffs these days.
Incidentally, I am entirely envious that you know Don Boudreaux personally. I have been in awe of his work from afar for about two decades, but I have not had a chance to meet him. Thanks for the lagniappe, too.
For what's its worth, which is near zero, I'm going with Professors E and F. Trump is no dummy despite what his vocal and numerous critics say and evidently believe.
Great article! How about a Theory G: Trump favors tariffs so that he can sell tariff exemptions to enrich himself (for example by renting space in Trump properties to companies who benefit from exemptions, at above-market prices), to enrich his family members (for example through "investments" made by exemption beneficiaries in Jared Kushner's Affinity Partners fund), or to produce campaign contributions from exemption beneficiaries to legislators who support Trump programs. My impression is that U.S. tariff history offers abundant evidence of this motivation at work.
Great example. I don't find evidence that Trump is using the levers to enrich his family, but enrich his ALLIES, perhaps. Don Patinkin once told me of a surprising finding with respect to the Israeli economy. Normally one thinks of inflation as a covert tax--a transfer of wealth from citizens to the government. He studied one period of high inflation and found that the transfers were going the other way. That the government was LOSING money by inflation. He wondered why, and then it hit him. The government was using inflation as a means of rewarding favored entities and demographics in the private sectors. Buying votes via inflation. There's also Milton Friedman's comparison of the tax system as a Christmas tree. Congress takes contributions and then leaves presents under the tree in exchange. The 1986 Tax Reform effect cleaned up the tax system. Friedman, or someone quoting him, said the Reform succeeded because there were too many presents under the tree. They moved to a much cleaner system, so they could being selling presents, once again.
Of all the pieces I've read criticizing the tariff ploy, this article best explores the Overton aorta of Trump's heart. You pulled off two daring feats. First, you ably discuss the variety of positions and their downsides and second you show precisely and without invective, the reason this tool can fail even as a political hammer.
The point at which other essays fail is in understanding the political implications of the tariff threats. Even if the threats realized small political gains (questionable) and they were employed in an obvious way that other politicians could see coming a million miles away, Mad Dog Trump's nuclear brinkmanship contains it's own sort of logic. As an opening gambit, it announces the American Flex (tm) is back on the table and that our president is willing to "go there" to get what he wants.
If you are a politician in a place where Trump is trying to get concessions, even if you never believed the tariffs were real, accepting the threat and working in this simple framework means that we can avoid going to the places where there may be real lasting pain, like congress. Everyone gets to play the emergency, spin the story as needed and simultaneously demonstrate that as much as Trump may be their personal devil, the US is their natural harbor.
I don't know if this was the greatest political play in the past 20 years but its so medieval and calculating I can't help but admire it. I can see how it's a one-time-trick and as a bludgeon doesn't work long-term, (ie if someone wanted to run out the tariff clock would we actually take the hit locally or roll back the tariffs first?) but I think it must be viewed in terms of its second order effects and tail before we can call it a mistake.
Another brilliant piece. For the record I am on Oren Cass's mailing list also. Trying to keep a balanced perspective. When Ms. Welch passed away, several of my geezer friends referenced the Incredible Voyage AND the real trivia winner, commemorating her passing, was when you remembered she posed with GOAT Syracuse lacrosse player Jim Brown for LIFE magazine.
Upon visiting American Compass‘s website for the first time (which was about five minutes ago), I couldn't help but frown and shake my head when I read the organization‘s motto: “Rebuilding American Capitalism.” Alas, we would all profit more if Cass et al. were devoted to rebuilding Adam Smith‘s capitalism.
Tariffs work in the ideal world of economics textbooks; the same textbooks that told us Keynesian economics were a how-to-guide for macro economics. The US now has $36 trillion dollar in federal debt with no easy way out, thanks to the magic of Keynesian pump-priming.
Trump's stated reason for imposing tariffs on Mexico and Canada and China is to stop the flow of dangerous drugs, such as fentanyl, into our country. We lose more young people to synthetic opioids than we ever lost in a war. According to the Centers for Disease Control and Prevention (CDC), the number of drug overdose deaths in the U.S. decreased by 3% from 2022 to 2023, with an estimated 107,543 deaths in 2023.". By way of comparison, in WW2 the US lost 104,812 people in 1944 and 106,107 in 1945. Those were by far the two worst years of WW2. Drugs are killing those numbers years after year after year.
The immediate reaction of Mexico and Canada to Trump's tariff threat was to send10,000 troops to their borders with us. China is the source of fentanyl precursors and it appears to have been a policy of the CCP to weaken the US using the drug trade. The threat of tariffs may induce the CCP to shut down their deadly trade with the drug cartels. China has much more to lose than the US because their economy depends on exports, and the US is their primary market.
A humane President would use every lever at his disposal to reduce that horrific death toll. The recent ban on mail from Hong Kong and China is just one of those levers.
An inhumane regime did everything in its power to open up our borders to the drug cartels.
Actually, tariffs DON'T work in the world of economics textbooks. They work in the minds of people who decline to read those textbooks or choose to ignore what those textbooks say. The question isn't whether the INTENDED results of tariffs are good, but rather whether the ACTUAL results are good. Generally, regardless of good intentions, the ACTUAL results of tariffs aren't good.
C2+F2, tariffs hurt America LESS than the country wanting to export to America, Therefore, the other country will do what America/Trump demands rather than get tariffs. Like Mexico & Canada show.
Tariffs plus less deficit vs non-tariffs plus more deficit is the more complex but more accurate description. The reduction in the govt deficit is a small but real benefit. Or maybe a Big benefit.
It depends on the elasticities--the price sensitivities. Those are sensitive to which country and which industry you're talking about. And tariffs that differ from one country to another set into motion a wasteful game of shifting goods from one country to another to evade the tariff. Low tariff for China and high tariff for Mexico? Stick the Mexican goods on a ship, sail them to Asia, move them around to make the origin hard to track, and then ship them back to the U.S. Mexico pays China for the privilege of playing this sneaky game of hide-the-origin.
:)
Yup of arrows. Thanks for the correction on the Vertigo ending. Yes, that does make more sense. And it seems that Hitchcock successfully fended up the demand, along with other demands that the film be made "less erotic."
Tariffs, like gun control, sound good. To realize they area actually bad takes work and understanding, which most people aren't willing to do -- nor should they do unless they are policy makers.
Lots of countries are still authoritarian dictatorships, but that doesn't mean that the U.S.'s unique democratic republic is a bad idea.
There is a game-theoretic judgment for reciprocal tariffs. A mechanical rule that says, "America will apply the same tariff rate on Country X that Country X imposes on America. The problem is that they're never handled as cleanly and neatly and dispassionately as the game-theoretic ideal would suggest.
Yup on all counts.
Well, game theory, and specifically the Prisoner's Dilemma, offer a possible reason why so many countries impose tariffs. And also a failure to understand the second- and third-round effects.
Speaking of Raquel Welch, imagine the sheer joy of 9 year old me viewing another cinematic masterpiece released in 1966 - One Million Years B.C.
Those were the days. But I digress.
Only minutes before I read this post, I saw an article on another tried and true economic tool:
"Brussels is weighing new powers to temporarily cap EU gas prices, which have recently hit record levels compared with the US."
As Emily Litella would say, "Never mind".
Raquel Welch was far superior to European Union caps on gas prices.
As shown by Trump's recent actions with Colombia, Mexico, and Canada, tariffs--or the threat of them--can be a useful tool. Through most of our history, they have been a tool for protecting a country's industries. And many countries are more restrictive of trade than we are--try selling American-made cheese in France! If "free trade" is only working in one direction, then it's not really free trade.
However, in the cases mentioned (Colombia, Canada, and Mexico) the threats actually accomplished nothing (other than pissing off allies). Colombia already had an agreement to take deportees negotiated by the Biden administration (did you know Biden deported more undocumented immigrants in his term than Trump did in his first term), but it required that Colombia be notified the flight was coming, and that the deportees be treated humanely (not manacled) on board. The first Trump flights were unannounced military flights with the deportees manacled, and they were turned away. After the threat of tariffs, on the cell phone call the Colombian President reminded Trump of the negotiated conditions and Trump agreed to abide by those conditions in the future. Deportation flights have resumed in accordance with the Biden negotiated conditions. Similarly, Mexico had negotiated with Biden in 2021 to have Mexico station 10,000 troops at the Border (they actually have 15,000 there). After the tariff threats Trump backed down in exchange for the same promise of 10,000 troop negotiated with Biden and all ready more than in effect. Canada announced a border security upgrade of $1.3B coordinated with the Biden administration in December. After the tariff threat Trudeau negotiated with Trump to implement that exact same border security plan already passed and funded by the Canadian parliament and coordinated with Biden (a border security plan mostly focused on keeping out drugs, guns, and criminals crossing from the US to Canada not the other direction, by the way). So much for the great deal maker.
As noted in another comment here, I'm an agnostic on whether the threat of tariffs accomplished anything useful in these three cases. I don't dismiss the possibility outright, but neither do I buy the administration's flag-waving.
As for your question "Did you know Biden deported more undocumented immigrants in his term than Trump did in his first term?" A critic of you point would have an obvious response: "It's kind of like someone neck-deep in water in Western Carolina last year asking, 'Did you know more water drained OUT of this valley THIS week than LAST week?' It's the net flows that matter, not the gross."
Verdict is out. Possibility is there, but claims of accomplishments and actual accomplishments are two different things. And like most mechanical contrivances, threats of tariffs tend to depreciate in value over time.
I’m not an economist nor do I play one on TV, but I think the most likely explanation is a combination of D and F. Tariffs give him the opportunity to combine his two favorite things — trolling the left and throwing his weight around the world’s stage — into one action. Win for him and his MAGA followers!
But this is Trump we’re talking about here. He’s like Forrest Gump’s box of chocolates: You never know what you’re going to get.
I suspect (but only suspect) that it's A, C, D, E, and F. And it wouldn't surprise me to learn that the relative importance of each theory comes and goes over time--perhaps abruptly. As for B, I'm confident that Trump has not read Johnson and Bhagwati and has not devised any algebraic proofs.
Robert, you have in this article exceeded even my extraordinarily high expectations. You have written in an entertaining, creative, and massively informative way all that can be said and should be said about Trump's notions and pronouncements and actions (so far) about tariffs. If there were a way, I would have this article in the minds of all people who are thinking and writing about tariffs these days.
Incidentally, I am entirely envious that you know Don Boudreaux personally. I have been in awe of his work from afar for about two decades, but I have not had a chance to meet him. Thanks for the lagniappe, too.
For what's its worth, which is near zero, I'm going with Professors E and F. Trump is no dummy despite what his vocal and numerous critics say and evidently believe.
Thanks! And yes, I do know the great Boudreaux personally. Fantastic fellow.
Great article! How about a Theory G: Trump favors tariffs so that he can sell tariff exemptions to enrich himself (for example by renting space in Trump properties to companies who benefit from exemptions, at above-market prices), to enrich his family members (for example through "investments" made by exemption beneficiaries in Jared Kushner's Affinity Partners fund), or to produce campaign contributions from exemption beneficiaries to legislators who support Trump programs. My impression is that U.S. tariff history offers abundant evidence of this motivation at work.
Great example. I don't find evidence that Trump is using the levers to enrich his family, but enrich his ALLIES, perhaps. Don Patinkin once told me of a surprising finding with respect to the Israeli economy. Normally one thinks of inflation as a covert tax--a transfer of wealth from citizens to the government. He studied one period of high inflation and found that the transfers were going the other way. That the government was LOSING money by inflation. He wondered why, and then it hit him. The government was using inflation as a means of rewarding favored entities and demographics in the private sectors. Buying votes via inflation. There's also Milton Friedman's comparison of the tax system as a Christmas tree. Congress takes contributions and then leaves presents under the tree in exchange. The 1986 Tax Reform effect cleaned up the tax system. Friedman, or someone quoting him, said the Reform succeeded because there were too many presents under the tree. They moved to a much cleaner system, so they could being selling presents, once again.
Dr. F** please.
Of all the pieces I've read criticizing the tariff ploy, this article best explores the Overton aorta of Trump's heart. You pulled off two daring feats. First, you ably discuss the variety of positions and their downsides and second you show precisely and without invective, the reason this tool can fail even as a political hammer.
The point at which other essays fail is in understanding the political implications of the tariff threats. Even if the threats realized small political gains (questionable) and they were employed in an obvious way that other politicians could see coming a million miles away, Mad Dog Trump's nuclear brinkmanship contains it's own sort of logic. As an opening gambit, it announces the American Flex (tm) is back on the table and that our president is willing to "go there" to get what he wants.
If you are a politician in a place where Trump is trying to get concessions, even if you never believed the tariffs were real, accepting the threat and working in this simple framework means that we can avoid going to the places where there may be real lasting pain, like congress. Everyone gets to play the emergency, spin the story as needed and simultaneously demonstrate that as much as Trump may be their personal devil, the US is their natural harbor.
I don't know if this was the greatest political play in the past 20 years but its so medieval and calculating I can't help but admire it. I can see how it's a one-time-trick and as a bludgeon doesn't work long-term, (ie if someone wanted to run out the tariff clock would we actually take the hit locally or roll back the tariffs first?) but I think it must be viewed in terms of its second order effects and tail before we can call it a mistake.
Thanks for the high compliments! They are appreciated. And I agree that the verdict on the effectiveness is still out.
Another brilliant piece. For the record I am on Oren Cass's mailing list also. Trying to keep a balanced perspective. When Ms. Welch passed away, several of my geezer friends referenced the Incredible Voyage AND the real trivia winner, commemorating her passing, was when you remembered she posed with GOAT Syracuse lacrosse player Jim Brown for LIFE magazine.
Thanks so much! The morning I posted this piece, I chanced upon her picture with Jim Brown. A great lady.
Upon visiting American Compass‘s website for the first time (which was about five minutes ago), I couldn't help but frown and shake my head when I read the organization‘s motto: “Rebuilding American Capitalism.” Alas, we would all profit more if Cass et al. were devoted to rebuilding Adam Smith‘s capitalism.
:)
Tariffs work in the ideal world of economics textbooks; the same textbooks that told us Keynesian economics were a how-to-guide for macro economics. The US now has $36 trillion dollar in federal debt with no easy way out, thanks to the magic of Keynesian pump-priming.
Trump's stated reason for imposing tariffs on Mexico and Canada and China is to stop the flow of dangerous drugs, such as fentanyl, into our country. We lose more young people to synthetic opioids than we ever lost in a war. According to the Centers for Disease Control and Prevention (CDC), the number of drug overdose deaths in the U.S. decreased by 3% from 2022 to 2023, with an estimated 107,543 deaths in 2023.". By way of comparison, in WW2 the US lost 104,812 people in 1944 and 106,107 in 1945. Those were by far the two worst years of WW2. Drugs are killing those numbers years after year after year.
The immediate reaction of Mexico and Canada to Trump's tariff threat was to send10,000 troops to their borders with us. China is the source of fentanyl precursors and it appears to have been a policy of the CCP to weaken the US using the drug trade. The threat of tariffs may induce the CCP to shut down their deadly trade with the drug cartels. China has much more to lose than the US because their economy depends on exports, and the US is their primary market.
A humane President would use every lever at his disposal to reduce that horrific death toll. The recent ban on mail from Hong Kong and China is just one of those levers.
An inhumane regime did everything in its power to open up our borders to the drug cartels.
Which would you choose?
Actually, tariffs DON'T work in the world of economics textbooks. They work in the minds of people who decline to read those textbooks or choose to ignore what those textbooks say. The question isn't whether the INTENDED results of tariffs are good, but rather whether the ACTUAL results are good. Generally, regardless of good intentions, the ACTUAL results of tariffs aren't good.
C2+F2, tariffs hurt America LESS than the country wanting to export to America, Therefore, the other country will do what America/Trump demands rather than get tariffs. Like Mexico & Canada show.
Tariffs plus less deficit vs non-tariffs plus more deficit is the more complex but more accurate description. The reduction in the govt deficit is a small but real benefit. Or maybe a Big benefit.
It depends on the elasticities--the price sensitivities. Those are sensitive to which country and which industry you're talking about. And tariffs that differ from one country to another set into motion a wasteful game of shifting goods from one country to another to evade the tariff. Low tariff for China and high tariff for Mexico? Stick the Mexican goods on a ship, sail them to Asia, move them around to make the origin hard to track, and then ship them back to the U.S. Mexico pays China for the privilege of playing this sneaky game of hide-the-origin.
THEORY B is definitely out. That would presume that Trump has actually read something.
That's kinda the joke. :) Hence the round-the-clock medical care.