In Anticipation of Lenient Reciprocal Tariff Liberation Day
Tariffs may be coming this week. Or they may not. They may cover everyone. Or they may not. So a few thoughts in advance of whatever may or may not happen this week:
1. Tariffs are a tool.
People continue to attack tariffs as taxes. It’s normal when libertarians do it, but odd when Democrats do it, since Democrats think taxes are a useful tool of social policy.
When people express confusion about what Democrats stand for, “tariffs are taxes” is a good example.
On Meet the Press, Ambassador Tai used an analogy that avoids that mess. Tariffs are a tool. They’re like a 2 x 4. If you have an architect and a blueprint, you can use a 2 x 4 to build a house, a school, a factory – or you can club people with it.
When the tariffs are finally unveiled, we should be asking ourselves: what are we building?
2. Tariffs are not bad just because he uses them.
There is a temptation to oppose whatever the Administration proposes. But Democrats have long seen the value of tariffs, including as a way of leveling the playing field against unfair competition. Reflexively opposing whatever your opponent is for just means your opponent is defining you.
How do Democrats define their vision for trade?
Working with partners and allies to reindustrialize, to deliver good-paying jobs, to respond to lessons learned from the pandemic — that’s using trade to build something. And tariffs are one of the tools you can use to do it.
3. He’s free-trade-fluid.
Quick quiz: at the 2018 G-7 Leaders’ Summit, which Leader proposed that all G-7 countries eliminate their tariffs? Yup. Tariff Man. And who balked, claiming “that would take a long time.” Angela Merkel! In his first term the President also launched free trade agreement negotiations with the United Kingdom and Kenya.
He says he’s Tariff Man, but he seems perfectly willing to remove tariffs. Project 2025 has a fair trade chapter and a free trade chapter. He might be using tariffs to fund tax cuts for the rich – but it’s also possible that he’s using them as leverage to pursue the very free trade agreements that many of his working class supporters oppose.
The reason tariffs were such a valuable marketing tool on the campaign trail is because they come across as anti-corporate and pro-worker. Union members and workers everywhere know how “free trade” has been used to tear up union contracts and kill organizing drives. Tariffs are a tool of working people. Any party representing working people needs to talk about them, embrace them, and then use them correctly.
4. We’re not an exporting powerhouse.
People often assume the world works like Econ 101, and if we pursue free trade it’ll be great for our exports. They don’t think about a country’s actual economic posture. U.S. exports are only between 10 and 13% of GDP.
Yes, yes, it’s popular to note that “95% of our consumers live outside the United States.” But not everyone on the planet has equivalent purchasing power. People in low income countries with per capita GDP of $193 do not have the same purchasing power as people in high income countries with per capita GDP of $48,700. The 95% stat is a Chamber of Commerce talking point. The Chamber is not known for its support of equitable economic policy.
Our superpower is not exports, but consumption, which is why so many trading partners want access to our market. It’s also why the theory of all these past trade agreements – that they were going to have a significant impact on our overall GDP – is wrong.
Chasing reciprocity in order to get everybody to lower their tariffs – well, that was pretty much the plan between 1950 and 2016. And we know what happened in 2016 – workers hurt by those policies said “enough.” It would be enormously ironic if after all of this tumult and grievance over trade we ended up doing what the President was elected in 2016 to stop doing.
5. Speaking of the PRC….:
How does any of this help with the core argument of the Project 2025 fair trade chapter: that our trade policy must address the challenges posed by the PRC’s economic model? We should be working with like-minded allies to leverage the combined power of our production capabilities and our markets to diversify supply chains and reduce vulnerabilities. Instead, we’re attacking those allies.
The PRC has been comparatively quiet even though it, too, is a target. One commenter invoked Napoleon: “when your enemy’s making a mistake, don’t do anything to disturb him.”