One Year Since "Liberation Day" Tariffs– The Economists Were Right

I find the discussion around tariffs in the US pretty weird. The people making the case for them right now sound like complete idiots at points and downright dishonest at other points, and the people making the case against them sound weirdly racist and classist.

It is partly because of polarization, but mostly because the US economic and policy discourse is centered around nebulous "Consume Harm", as measured in price.

The "for" camp claims:

1. Tariffs will bring manufacturing home overnight, 2. Everything import should be taxed, 3. And tariffs are being paid by the foreign exporter, so American consumers will be shielded from price increases.

All of these claims are lies. American business' biggest input cost is labor. By a long margin. Tariffs need to be much higher for manufacturing to be a feasible investment in most industries. Which means more pain for the consumer.

The 'against' camps argument all hinge on the fact these are filthy jobs for filthy foreigners and poors. There is no need for them in the US. Even if they are not focusing on that issue, they are talking about how taxing imports cause "Consumer harm" and therefore it is bad.

That is the crux of this post as well. The tariffs did cause price increases for consumer.

But if the goal is to increase manufacturing base in the US, then this harm would be irrelevant in the long term.

This obsession with "Consumer Harm" has poisoned all trade and economic policy in the US. It is the reason Anti-trust is toothless in the US, why every industry is an oligopoly, and why the rust belt exists.

Of course, protectionism is not the only ingredient needed to promote any given industry. China, Vietnam, Korea and India did it via robust industrial policy. Some might say US did so as well, during World War 2. But that is cOmMuNiSm now.