Trump’s Tariffs Weren’t Really About Trade Policy
Now that the Supreme Court has relegated Donald Trump’s tariffs to the history books, their obituaries need to make clear how utterly out of sync with any previous tariffs they actually were. Nothing in their raisons d’être or implementation bore any resemblance to any previous American tariffs.
(On Saturday, Trump levied 15 percent tariffs on goods from all nations under a different law, but that law stipulates that the tariffs are only good for 150 days unless Congress votes to extend them—a vote that would be tantamount to electoral suicide for many Republicans up for re-election in November.)
To begin, the tariffs of the 19th century, for which Trump has been volubly nostalgic, were enacted to protect America’s fledgling new industries, centered in Northern states, from competition from the more developed industries of Britain and Europe. By contrast, as early as the 1820s, leaders of the almost entirely agricultural American South, John C. Calhoun most particularly, railed against tariffs that had been enacted to give breathing space and growing room to these nascent industries (the “tariff of abominations,” Calhoun termed it). The Southern slave plantation owners whom Calhoun represented loathed having to pay more for the European-made luxury goods they enjoyed; the Southern industrialists—well, there were no Southern industrialists. But the owners of the New England clothing and iron mills, and later in the century the owners of the massive steel mills, welcomed tariffs that enabled them to grow their domestic markets free (or at last freer) from British competitors.
Trump’s innovation in tariff-ology is that the domestic industries he’s most insistent on protecting aren’t fledgling or new; they’re dying or dead. Far from being threatened by foreign competition, they’re industries that rival nations either are scaling back or have abandoned altogether. So Trump attempts to resurrect coal, while blocking the further development of wind and solar power. He promotes fossil-fueled cars and cripples the domestic sale and construction of EVs, enabling our chief economic competitor, China, to take a giant step toward cornering the burgeoning global market in EVs, and then cars in general. When it comes to our most cutting-edge industry, AI computer chips, Trump has allowed their manufacturer, Nvidia, to sell them to China so long as his government gets a take—25 percent of the proceeds—from every sale.
So Trump’s policy protects industries which our competitors are rapidly transferring away from, even as we abandon the essential industries of the future that our competitors are working furiously to develop. This isn’t to say that selective tariffs aren’t still sound policy in major American industries that remain central to the nation’s prosperity, autos and steel in particular. But both those industries (and the auto- and steelworkers they employ) would be in a lot better long-term shape if Trump allowed them to position themselves for future markets by going electric. Instead, his myopic view of transactional policy leads him to consider it a win when he wrangles a quarter share of Nvidia’s proceeds from bolstering Chinese power. In for a penny, out for a pound: That’s the economic logic behind Trump’s trade policies.
Inasmuch as Trump had imposed tariffs on nations with which we run a trade surplus and whose imports have no discernible effect on American companies, it’s clear that he inflicted those tariffs only to show he could dominate other nations. That—not any form of economic logic—was always the main reason behind his tariffs, but it was augmented by whatever personal grievances, real or imagined, he had against some nations’ failure to submit to his non-tariff, non-economic demands. So Canada had been singled out for punishment because it angrily refused his demand that it become our 51st state, and because its prime minister called him out for the disruptive force that he is. Switzerland had been singled out, too, because, Trump said, he’d had a bad phone call with its leader. Nations where whites don’t constitute a majority of the population were punished because Trump doesn’t like nations where whites don’t constitute a majority of the population. Longtime European allies that sounded alarms at Trump’s vows to seize Greenland from Denmark were punished because he doesn’t like nations that sound alarms at his proposals.
These were tariffs rooted not in the national interest, but in Trump’s personal interest, and any nation that failed to submit to his demands—especially if his demands were screwy, because if they were rational, that wouldn’t constitute a real submission—was affronting Trump’s personal interest (or, if you prefer, wounding his infinitely woundable ego).
But one other raison d’être also lurked dimly behind Trump’s reign of tariff terror. He has stated it repeatedly, including at a cabinet meeting last December, when he remarked yet again on what the magic of tariffs could do:
“I believe at some point in the not too distant future, you wouldn’t even have income tax to pay because the money we’re taking in is so great. It’s so enormous that you’re not going to have income tax to pay. Whether you get rid of it or just keep it around for fun or have it really low, much lower than it is now, but you won’t be paying income tax.”
Trump’s assessment has been disputed by almost every sentient economist. Tariffs would have to be so stratospheric to supplant income tax payments that they’d wipe out all but the wealthiest American consumers (and every producer who needs imported parts). The new survey from the Federal Reserve Bank of New York, documenting that 90 percent of the costs imposed by Trump’s tariffs have been borne by American consumers, makes clear the damage already caused by less-than-stratospheric tariffs.
But it’s those wealthiest American consumers who presumably could weather the cost of stratospheric tariffs who are also the biggest income tax payers (though also the biggest income tax dodgers) and thus the one group that would, at least in Trump’s theory, benefit from substituting tariff income for the income tax. That group, of course, includes Trump and all the little Trumps. It also encompasses the mega-rich who are funding his PACs and his causes and, now and then, his pockets. It’s by no means clear that they believe Trump’s nonsense about tariffs supplanting the income tax, but Trump himself clearly believes it, and that’s one more reason for his tariff obsession.
And again, that belief has no precedent in America’s trade and tariff history. His much-beloved 19th-century tariffs weren’t enacted to supplant the income tax; there was no income tax until the 16th Amendment to the Constitution was enacted in 1913, and it didn’t really take a significant chunk of truly wealthy Americans’ income until World War II.
In short, Trump’s tariff policy has been rooted exclusively in his egomaniacal transactionalism, his bigotry, and his greed. Never before in American history has the personal been so political, and vice versa.
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