(AUTHOR’S NOTE: I swear that I wrote this yesterday (Wednesday) over my lunch hour, before the partial tariff pause was announced. Does that make me look like someone who can put on a conical purple wizard’s hat and see the future, like a modern-day Nostra-martacus? I’m too modest to say that. But on the other hand, who am I to fly in the face of public opinion?)
This is going to be a rare, four-column week for me, since I posted columns on Monday and yesterday, and will be posting again tomorrow.
Before CO Nation gets too happy about that, I’ve got to warn you about this one. I’ve been gratified that many readers have lately been posting responses that my most recent column “is your best one yet,” or “my favorite column you’ve ever written.”
And that always makes my day to hear! However, trigger warning, I expect that many readers will say of today’s column, “This is your worst column ever,” or “Who are you, and what have you done with our beloved hilarious genius who is always right about everything, and makes our lives worth living? Because this column sucked!”
Or words to that effect.
But I’m forging ahead anyway: this is my column in which I tell you what’s wrong with Trump’s tariff roll-out.
First off, I’m an English professor with a black belt in mockery, and trophies for “Best Out-Kicking His Coverage in Landing a Great Wife,” and “Owner of the best Wonder Dog ever.” But I’m not known for my brilliance on all things financial (hence my decision to spend 10 years getting a PhD in English!), and I’m the farthest thing from an expert tariff-ologist. So you wouldn’t normally want to pay any attention to my thoughts on the subject.
But I’ve been reading and informing myself on the topic, and when I initially read that Victor Davis Hanson was very pro-Trump-tariffs, that carried a lot of weight with me. Because as a general rule, I’ve found that if you’re on the opposite side of an argument from VDH, you better check your premises, and then slowly back out of the debate.
But then I read the reasons why Ben Shapiro, Thomas Sowell and the great and powerful CO were all tariff skeptics. And I’ve also learned that if you find yourself disagreeing with those three, there’s a dangerously high probability that you’re on the same side of the argument with AOC, Chuck Schumer and Hakeem Jeffries. And as Jasmine “fake lashes” Crockett has probably said, “Ain’t nobody got time fo’ dat!”
So I went back and listened to VDH’s entire take on tariffs, and found that he’s basically where I was, which is that using reciprocal tariffs to negotiate deals that results in fewer tariffs and freer trade is a good thing, but that Trump’s messaging on the topic – including his lumping trade deficits and many other financial issues in with tariffs – is confusing and counter-productive, and should be dropped in favor of a clear, uncomplicated message solely about tariffs, and his goals behind his tariff policy.
1. Trump’s messaging on tariffs has been all over the map, and wildly inconsistent. Trump (and administration officials) has said many times that tariffs are great in general, and that they should be regular, long-term features of our economic strategy, because they produce huge piles of cash to the US. He’s also said many times that tariffs are a temporary means of achieving a negotiated dropping of tariffs, and the resulting explosion of free trade.
Those can’t both be true, because they contradict each other. If tariffs are great and produce a financial windfall for the US, we should keep them in place forever. If they are a temporarily necessary, rough-elbowed negotiation tactic which we want to get rid of ASAP (i.e. as soon as they produce a new deal), then they can’t be a great long-term windfall producer.
I’m guessing that he means that they are useful in some circumstances (e.g. as a means to punish our enemies and reward our allies, or to protect specific industries that have national defense implications, etc.) and counter-productive in others.
But I’m GUESSING that. And so are the markets, many of his own supporters, and even VDH, who wants him to drop the chaotic vagueness. Trump is the clearest communicator since Reagan, so there’s no reason for him to be hampering his own policy through this mish-mash of self-contradictory messaging.
2. Trade deficits are very different from tariffs, but Trump sometimes seems to not admit – or even recognize – that difference. When his chart says “tariffs” (and then below that, includes smaller print that says “including currency manipulations and trade barriers”) he’s lumping together apples and oranges, especially since his numbers only make sense if he’s primarily counting trade deficits rather than tariffs.
For example, South Korea’s overall tariff rate on American imports is 0.8% (not 8%, eight-tenths of 1%), and Viet Nam’s is around 10%. But his chart labeled “Tariffs” says that Viet Nam’s tariffs are 90%, and South Korea’s are 50%. Which is ridiculously wrong, and unnecessarily gives his critics a weapon to bash him with.
I’m not saying that trade deficits aren’t sometimes created in part by protectionist policies like tariffs, currency manipulation, bogus “safety concerns,” etc. And in those cases, I’m all for tariffs to address that. But that’s certainly not the case for all trade deficits; in fact, many of them largely or even totally exist only because of the lopsided relative population and wealth of two trading countries.
There are over 300 million people in the US, and according to Federal Reserve stats, the per capita income of Americans was $73,529 in 2024. In that same year, Somalia’s population was 19 million, and their per capita income was around $900. Viet Nam’s population was 101 million, and their per capita income was 114 million Vietnamese dong. Which sounds pretty good, until you realize that that is roughly $4700 US dollars.
(Sidebar, because I am basically a grade school child: The great Clint Eastwood western “A Fistful of Dollars,” if it were translated and closed-captioned to be shown in Viet Nam, would have an absolutely hilarious title. And the Vietnamese Stormy Daniels would somehow star in it.)
Given those facts, how many American products do you think the average Somalian earning $900 per year or the average Vietnamese earning $4700 could buy, versus how many Somalian or Vietnamese products the average American earning $73,000 could buy?
The answer is somewhere between “jack” and “squat.” In other words, if Vietnam and Somalia trade with the United States at all, there is no planet on which there would EVER be a non-lopsided trade deficit with both of those countries. Because it is impossible.
And if I haven’t already pissed you off, consider this, which is a variation of something I read from Thomas Sowell (peace be upon him) many years ago: in many cases, a trade deficit is not a bad thing at all, but the beneficial result of voluntary exchanges made in a free market.
For example, every year I run a 100% trade deficit with Publix and my local bookstore: I buy groceries and books from them, but they buy nothing from me. By the same token, I have a 100% trade surplus with all of my tenants, because they give me many thousands of dollars while I give them zero money, providing only a great place to live in a great neighborhood. And everyone is happy.
The good news is that the current tariff impacts on the stock market are both (IMHO) less catastrophic and less long-lasting than our most panicked commentators (and all congressional Dems) are screaming.
That’s not to say that they’re not bad. American investors can’t lose $6-7 trillion of value without that hurting, and I’m just barely smart enough to know that such losses don’t only hurt fat cats and rich investors. (Because I’m not a commie class-warrior!) Small investors and entrepreneurs, people with 401Ks and pension plans, and everybody working for large or small employers who have debt or require foreign parts, materials or customers (i.e. a large proportion of large and small employers) will be hurt by this, if it lasts for very long.
By the same token, as I write this, the DOW is right around 40,000. Which indicates a disastrous plunge down to the last time it closed below 40K, during the height of the calamity of that long-ago trauma happening…wait for it…three years ago! And the NASDAQ – even after the bloodbath of the last several weeks – is still up 3% over a year ago, according to the market stats scrolling across my computer screen right now.
Look, I don’t want to mock anybody who’s worried about the slide. I’m retired and my wife is about to retire, and our retirement nest egg is down by around six figures, which isn’t fun. On the other hand, the market goes up and down all the time, and if a 10-15% drop is unbearable for you, you probably shouldn’t be in the stock market. You can (and maybe should) get a not-great but safe return of around 5% (I think) in a fixed annuity or a long-term CD.
And my gut tells me (but again, don’t trust financial advice from an English professor!) that the current turmoil is likely to be pretty short-lived. My evidence is the history of the market over the last 50 years, and also recent history. For example, earlier this week, when a false rumor that Trump was pausing the tariffs for 90 days, the market gained something like $2 trillion (which then disappeared again when the rumor was debunked). And on Monday, spurred by the news that the Trump administration and the Japanese were negotiating a lowered-tariffs deal, the Nikkei jumped by around by 6.5%.
I don’t see any reason why – once Trump actually does start signing new tariff agreements with Japan and many other countries – the market won’t shoot up, the same way it did on these rumors in the last 15 minutes.
In conclusion, I’m a pani-can’t, not a panican, and I think that this current trade sturm und drang too will pass. But I wish that Trump would take advice from VDH, Thomas Sowell, CO (and even me), and clean up his needlessly confusing and contradictory messaging.
By the way, did you notice how smart I just sounded when I reported the Nikkei’s reaction to the newest tariff news?
Well, until an hour ago, I thought the “Nikkei” were those old-timey Japanese warriors with the cool armor, or possibly the loons who dove their Zeros into our ships in 1945. (Hey, idiots, let us introduce you to our little friends, Fat Man and Little Boy!) But I did a minute’s worth of research online, and you foolishly trusted me (even though this time I was right).
Let that be a lesson to you the next time some “expert” assures you that Trump’s tariffs are the end of the world as we know it.
Because that “expert” might just be a clueless liberal arts professor posing as a smart guy, even though he might not know Adam Schiff from a hole in the ground!
Hamas delenda est!
Martin Simpson 