Steelmanning tariffs (sort of)
Some observations that perhaps this isn't so crazy, or at least, no more crazy than what we've been living with for the past six years
tariffs are probably not-the-best, but losing one’s mind is worse
evidence of positive tariff-effect on the bottom-line
if these tariffs are bad, the time to have complained was six years ago (and that was just the start)
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Steelmanning Tariffs (sort of)
Let me begin by saying I’m biased against tariffs, for all the obvious reasons.
taxes, other than the Pigouvian sort, are generally bad;
trade is good;
engineering the economy is bad.
And yet, for many of the same reasons that I’m biased against tariffs—central planners lack the information and/or incentives to optimally “direct the economy,” relative to the alternative, leading to unexpected and unintended consequences that typically leave everyone worse off—I’m loath to make too many predictions about whether Trump’s tariffs will be a big deal or not (and in what ways).
The uncertainty is compounded by the fact that the particulars of the tariffs are, as yet, unknown, and will in all events evolve as time goes on.
All of which is to say that while I’m biased against tariffs, I’m really biased against the teeth-gnashing, histrionics, and bold prognostications, that have belched forth over the weekend. And if I was cautiously optimistic that “the media” would acquit itself better for Round Two of Trump, it appears as though “journalism” is becoming unreadable, yet again. That’s really unfortunate.1
And so, in the spirit of careful observation, combined with a cursed disposition towards zigging where others zag, Random Walk will make two fairly limited observations in the vein of “maybe these tariffs aren’t so crazy, after all.”2
To be clear, my actual view is “tariffs are probably bad, but how bad, and in what ways, I’m not really sure.”3
But since everyone appears to be losing their minds again certain that the mad king is loose, my nature compels me to suggest “maybe it’s not so bad.”
Increased revenues, and we need those
The first observation is that tariffs do appear to raise government revenues, and well, we definitely need those.
Tax receipts on imports basically doubled during Trump’s first round of trade salvos:
Tax receipts on imports rose substantially in 2018-19, and peaked at ~$100B in 2022.
And yes, if you noticed the timeline, Trump’s tariffs very quickly became Biden’s tariffs (and the world, did keep turning).
Indeed, more so than anyone seems to let on, as per the next chart.
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