Briefly: Tariffs Backfire

Like others, back in 2024 I favored the idea of using tariffs to encourage the growth and/or return of manufacturing to the United States, to restore a more balanced economic model after the disaster of hyper financialization since Reagan. The use of tariffs—which are taxes on US consumers—for that purpose would require careful calculation to be effective, but that’s what the Congress is for. Congress, which has the sole power to tax Americans, is supposed to engage in just that sort of information gather, balancing of pros and cons, and careful consideration before passing laws.

Instead, once in the White House, Trump unconstitutionally usurped Congress’ powers and proceeded to wield his usurped powers like a meat axe. That approach quickly made it apparent that reshoring wasn’t the real goal, although it might be a side effect. The real goal of Trump’s tariff shock and awe was to force each country in the rest of the world to bargain with Trump for tariff relief. The price for tariff relief would be pledges to invest vast sums of money in the US—remember all Trump’s claims about $17, $18 trillions of dollars are more. And the kicker was that Trump intended to himself be the arbiter of what industries received all that investment money. Obviously the AI tech bros were going to get a major portion of the swag to fund their insane data center construction.

Predictably, it all came a cropper. The SCOTUS wasn’t about to allow Trump to bulldoze the Constitution, no matter what a supine GOP majority in both houses was willing to let pass. And China simply faced our narcissist in chief down.

There’s an excellent 12 and a half minute video available to explain how all this has backfired. The title tells you just how bad the miscalculations have been. And if the miscalculations—assuming the counter factual narrative that this was actually about reshoring—weren’t bad enough, Trump has continued to use tariffs to try to punish foreign leaders whom he doesn’t like. Do yourself a favor and follow this link:

Why US tariffs are pushing factories back to China

After a decade of high tariffs and trade curbs to push manufacturing out of China, firms are going back.

The Trump Administration is again hiking tariffs on countries and products from everywhere, instead of merely targeting Chinese industry.

The math that may have encouraged businesses to shift supply chains away from China, now works instead to reverse those moves.

The result of this madness is a steep drop in manufacturing jobs—which Bessent is trying to deflect with claims of productivity growth—and greatly stiffened competition for a key US export sector—agriculture.

There’s an election coming up in a few months.