‘Liberation Day’
Happy Liberation Day!
Aside from our senses, what are we being freed from?
A properly functioning market? The greatest quality and quantity of goods sold at competitive rates? Producers having to innovate to excel? The ability to buy what we want without giving government a bigger cut?
Whatever deliverance we’re promised was postponed by a day, so Americans wouldn’t think the jokers in charge were playing them for fools.
But this afternoon, at long last, our president will unshackle us from foreign “unfairness”… by building a bigger blockade around ourselves.
Seriously, not Literally
What are the components of today’s Emancipation Proclamation?
Tho’ plans could change before lunch, and be revised again until (or after) details are announced, the Trump Administration will ostensibly impose 25% import taxes on cars and parts… atop the same percentage already applied to steel and aluminum… with comparable duties on countries buying oil and gas from Venezuela.
The president has also intimated he’ll impose tariffs on certain agricultural imports. Specific products and rates remain unclear (of course), but this could tie to the broader notion of reciprocal tariffs.
As of now, these are anticipated for all trading partners. If taken literally (they shouldn’t be, tho’ they should be taken seriously), this would entail reducing taxes the U.S. currently imposes on most countries’ imports. But it’s probably safe to assume that “reciprocal” runs only one direction.
Sector-specific taxes on imports such as pharmaceuticals, semiconductors, microchips, lumber, and copper have also been bandied. But recent reports suggest they might not be part of today’s rollout, with some (or all) delayed indefinitely or excluded entirely.
Other last minute changes may be in the works. Apparently, the Trump team was scrambling into the small hours this morning to concoct new medicine, to make the potion more palatable to Congressmen and executives whose stock portfolios are making them sick.
What ailment is this elixir supposed to cure? Is it more deadly than the assortment of diseases it’s bound to cause? We don’t know. Nor does anyone else, especially the quacks who are selling this snake oil.
The idea that other countries are “ripping us off” simply isn’t true. The 300% Canadian tariffs on US dairy and Japan’s 700% imposts on American rice take effect only above export thresholds that are rarely reached.
David Stockman, Ronald Reagan’s budget director, explains one example that’s indicative of many:
“In 2024 Canada did not collect one single Canadian dollar or US dollar or even plug nickel of tariff revenue from US dairy exporters of the four leading dairy export products—fluid milk, butter, cheese and skim milk powder….
And the reason for that lies in the so-called TRQs (tariff rate quota) that the Donald himself negotiated with the Canadians in the course of attaining his ballyhooed USMCA deal in 2020.
[In 2024] US export volumes did not reach the quota level in any of them. Therefore, no tariff was applied to nearly 71 million pounds of US dairy exports to Canada last year, meaning that the Donald keeps ranting about a problem that he had already fixed himself!”
Economics and Politics
Most economic debates are really political squabbles. We’ve been conditioned to think of economics and politics are two sides of the same coin. In reality, economics is the gold and politics an alloy… if not outright rust.
“Economists” who advocate tariffs… like those who urge a minimum wage or centrally managed money… are akin to “scientists” who pushed lockdowns to contain a respiratory virus. They almost certainly know better. But they definitely know what’s best… for themselves.
As with any government “authority” or corporate “expert”, they’re extremely knowledgeable in what they are paid to say. They’re compensated to promote particular politics under the guise of economics. It’s a cloak that gets a lot of wear.
Economics is the study of purposeful human behavior under conditions of scarcity. Politics is forcibly shifting wealth from one pocket to another. As with any taxes, tariffs are terrific for doing that.
Economically, tariffs don’t make sense. But politically, they can be potent. As in most political battles, beneficiaries are concentrated and vocal, while victims are usually indifferent and diffuse.
During the most recent campaign, Trump tried to soothe them too. On several occasions, he suggested tariffs could replace the income tax.
That’d be great.
But since the election, it looks like we’re getting one and keeping the other. In a shocking development, repealing the income tax is no longer discussed. Probably because the idea was never practical with our gargantuan government.
From the founding to the “progressive” era, tariffs were the main source of government funds. That worked well when the federal budget was only $715M (as it was in 1913). In today’s dollars (based on gold), that’s about the size of the Department of Energy (among many that shouldn’t exist).
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