Well, after a stock market crash, a bond market crash, and a blizzard of recession predictions, Donald Trump has paused some of his massive “Liberation Day” tariffs. But the reprieve is only partial and temporary.
The very high tariff on China is still in place and in fact has been increased to 145%. The 10% tariffs on all imports are still in effect. “Sectoral” tariffs on autos and other specific products are still there, and the tariffs that Trump had previously placed on Canada and Mexico are still there (though whether they’re cumulative with the new tariffs is still in question). [Editor’s note: China retaliated with 125% tariffs on the US on April 11.]
And on top of all that, the very high tariffs on other US trading partners may return in three months’ time. Remember that Trump initially paused his tariffs on Canada and Mexico after the stock market fell, but eventually did implement them. So “Liberation Day” may simply return in July. So we’re still very much in the Big Tariff Era.
Some Trump supporters are breaking with the president or at least pleading with him to reverse his policy. Some are staying quiet, desperately hoping that someone stops Trump or that it all somehow blows over. But many are rallying around the tariffs, frantically coming up with a blizzard of justifications and rationalizations.
Some of this is just simple favor-currying — Trump has power, and lots of people suck up to power. Some is simple self-preservation, since MAGA influencers realize that infighting could bring down their movement. And some is surely cognitive dissonance, with Trump voters trying to rationalize an increasingly obvious mistake.
But some people undoubtedly sincerely believe the arguments that have been made on behalf of Trump’s tariffs, or at least seriously entertain them.
Yes, the damage to the markets and the predicted damage to the economy should be sufficient proof that this was a bad move, but the arguments in favor deserve to be rebutted instead of simply pathologizing the people who make them (and after all, this is an economics blog, not a psychology blog).
Fortunately, this is not too hard to do since none of the tariff defenses make much economic sense. So this post can be your quick, helpful user’s guide to rebutting these arguments when you encounter them in the wild.
It’s hard to keep track of all the President’s loyalists are saying, but here’s a list of the pro-tariff arguments I could find:
- “Tariffs will get rid of trade deficits, which are bad for America”
- “Tariffs are a negotiating tactic”
- “Tariffs will reduce inflation”
- “Tariffs will reduce interest rates, making it easier to finance the national debt”
- “Tariffs are actually tax cuts”
- “Tariffs will bring back American manufacturing”
- “Tariffs will put the US economy on a more sustainable footing”
- “Tariffs will weaken China relative to the United States”
- “Tariffs will make America more manly”
- “Tariffs will force Americans to live more modest, austere lives”
I’ve already dealt with the first of these in a recent post, Trade deficitis do not make a country poorer.
So let’s go through the rest of these one by one and explain why each is misguided. I’m going to try to take each argument as seriously as possible — not because I feel warm feelings toward the people perpetrating these insane policies, but because I know there will be lots of people out there who are on the fence about whether to trust Trump or someone like me.
Even though all of these pro-tariff arguments are wrong, we have to understand why they might sound believable in the first place.
“Tariffs are a negotiating tactic”
Lots of people are claiming that the tariffs are simply a way of getting leverage for negotiations with other countries so that Trump can pressure those countries into doing a bunch of stuff that he wants. This argument will inevitably get stronger in the wake of Trump’s 90-day pause, with some apparatchiks pivoting seamlessly from “tariffs are good” to “art of the deal.”
This might seem like a reasonable thing to assume since, in his first term, Trump did cancel some of his plans for China tariffs after China promised to buy a bunch of US farm goods (which of course it never bought). And Trump is now holding talks with some of America’s trading partners, in which he presumably plans to demand various concessions ahead of the new July Liberation Day.
One obvious problem with this idea is that Trump put tariffs on way more countries than he could realistically negotiate with. The administration, possibly using ChatGPT,1 made a list of tariff rates for 90 countries, even including some uninhabited islands. Even if Trump negotiated with one tariffed country per week — a far greater rate of work output than the President is known for — it would take him almost two years to make deals with all of them.
I suppose it’s possible that Trump might make deals with a few key trading partners — Japan, the EU, and so on — and leave the rest out to dry. This would be horribly unfair, but at least it would be logistically possible.
But even then, it’s hard to imagine what kind of concessions Trump would ask for. Most countries already have low or zero tariff rates on American goods — far lower than the imaginary rates that Trump’s team attributed to them. When Vietnam offered to lower its tariffs on American goods to zero, Trump’s trade guru Peter Navarro said that the offer “means nothing.”
Countries could conceivably agree to have their governments buy American goods until their bilateral trade deficits with America go to zero. To most, that will simply not be worth it. But on top of that, Trump even put tariffs on countries like Australia with whom the US already runs a trade surplus. It’s just not clear what else they could do to satisfy Trump.
But the biggest reason to doubt the “negotiating tactic” defense is that Trump and some of his top advisors have already thrown cold water on the idea:
“This is not a negotiation,” White House trade advisor Peter Navarro told Fox News. “This is a national emergency based on a trade deficit that’s gotten out of control because of cheating.”…On Thursday, Trump told reporters that the new trade barriers “give us great power to negotiate.” The following morning, on the other hand, he posted on Truth Social that “MY POLICIES WILL NEVER CHANGE.”…
[T]he White House claimed in a fact sheet…”These tariffs will remain in effect until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated.”
Trump might eventually backtrack on his tariffs, but it’s not clear that there’s much other countries can do to raise the odds of such a reversal.
The most reasonable conclusion is that the tariffs aren’t about negotiation — they’re being driven by Trump’s sincere (but insane) ideological beliefs about trade and trade deficits.
“Tariffs will reduce inflation”
Inflation was the thing that made people most angry about the Biden economy. A lot of Trump supporters voted for him in 2024 on the assumption that he’d bring prices down, and in fact, Trump himself promised to do this. So I guess it’s natural for some Trump supporters to think that tariffs are a way of reducing inflation.
There are two big problems with this. The first is that tariffs pretty obviously raise prices — in fact, that’s the point of tariffs. That’s how they work. The idea of tariffs is to make foreign goods more expensive so that people will buy less of them.
Even if people partially switch to domestically produced goods, there will be some upward pressure on prices. And because tariffs force domestic producers to specialize less, they make domestically produced goods more expensive as well. Essentially, tariffs are like the oil shocks of the 1970s — except instead of just imported oil suddenly getting more expensive, it’s imported everything. The oil shocks of the 1970s caused America’s most painful inflation.
Trump’s Treasury Secretary, Scott Bessent, has argued that the price increases from tariffs will be a one-time thing — a short burst of inflation followed by a return to normal inflation rates. But as 2021-22 showed, even a short burst of inflation can make people mad.
And more ominously, there’s the possibility that a short burst of inflation could ignite inflationary expectations that raise inflation in the long term as well as the short term.
Most macroeconomists think that something like this happened in the 1970s — the oil shocks convinced the nation that the Fed wasn’t willing to fight inflation, forcing the Volcker Fed to raise interest rates to punishing rates, causing two recessions, in the early 1980s in order to reestablish its credibility.
So, the basic effect of tariffs is inflationary. It’s just a textbook negative supply shock. But the people who think tariffs will reduce inflation are hoping there will be a macroeconomic effect that counteracts this basic microeconomic effect. They’re hoping that tariffs will cause a recession that will reduce inflation.
That’s actually possible. There are macroeconomic theories in which the expectation of a future negative supply shock causes a negative demand shock today. Basically, what happens is that pessimism about the economy takes hold before the actual effect of policy does, causing a classic panic and demand-based recession, in which both prices and output fall.
There are two big obvious problems with this idea. The first is that recessions are bad. But the even bigger problem is that recessions are temporary. If you implement policies that fundamentally make everything more expensive, and this causes a panic that temporarily reduces prices, you get a couple years of a crappy job market and then prices start going up again from the effect of your policy.
No serious macroeconomist, of any school of thought, would suggest intentionally implementing a policy that makes the US economy less efficient as a way of bringing down inflation. It’s just a really terrible idea.
“Tariffs will reduce interest rates, making it easier to finance the national debt”
Closely related to the previous idea is the notion that tariffs will reduce interest rates. High interest rates are a real problem since they’re making it harder to finance the US national debt. Bringing rates down would be a good thing.
How could tariffs bring rates down? The obvious way is by causing a recession through the mechanism I described in the previous section. If tariffs cause a general panic that hurts aggregate demand in the short term, you could get a couple of years of lower inflation.
That might give the Fed room to cut interest rates in order to boost the real economy and counteract the tariff-induced panic. And those temporarily lower rates might allow the US government to roll over a lot of its debt at low rates (hopefully with long-maturity bonds that would lock in the low rates for a long time).
As I previously noted, the first obvious problem with this idea is that recessions are bad — they hurt a lot of Americans, and voters understandably hate them. But a deeper, more fundamental problem is that there’s no reason to think that long-maturity interest rates will go down in a tariff-induced recession.
Short-term interest rates are controlled by the Fed. But while long-term rates are influenced by the Fed, they’re also influenced by other factors. For developing countries, the most important factor is a risk premium — a 10-year bond might get defaulted on before the 10 years are up. Investors typically require that developing countries pay much higher interest rates on long-maturity debt in order to compensate the investors for the risk of default.
For a long time, the US didn’t have to worry about a risk premium on its government bonds. People just assumed that the US would never default. But Trump’s demonstrated that the U.S. government has changed — it’s now willing to engage in intentional acts of economic self-sabotage for domestic political reasons.
If Trump is willing to smash the US economy with tariffs, why not also smash it with a sovereign default? In fact, some MAGA apparatchiks and thought leaders are now openly talking about the possibility of a US debt default.
In general, stuff like this just makes bond investors see the US as a less safe place to park their money. And so we’ve begun to see an exodus from US debt, causing long-term interest rates to rise:
This was one of the fastest rises in long-term rates in modern US history. It’s worth noting that although the stock market immediately rallied after Trump’s announcement of a 90-day pause on some of his tariffs, bond yields didn’t go back down.
This is exactly the opposite of what Trump’s defenders wanted to happen, and it’s going to make the US national debt an even bigger problem.
“Tariffs are actually tax cuts”
Well, no. No, they’re not. A tariff is an import tax — that’s just what “tariff” means. Trump’s people can scream “tariffs are tax cuts” until they’re blue in the face, but it’s like screaming that the gas pedal makes your car go slower. It’s just an obvious lie, of the “up is down, freedom is slavery” variety.
Of course, there will always be a small minority of Americans who believe every word that comes out of Trump’s mouth or his apparatchiks’ mouths, but most Americans know the plain truth:
Now, some Trump apparatchiks may argue that tariffs give the government the fiscal space to pursue more cuts in income taxes and other kinds of taxes. In other words, tariffs raise tax revenue (because they’re taxes), so if you want, you could say, “OK, this means we can cut other sources of revenue”.
You can do that if you want, but it’s highly inadvisable. The US fiscal deficit is so unsustainably huge right now that to funnel tariff revenue into tax cuts, instead of using it to reduce the deficit, would be incredibly irresponsible.
But on top of that, there are two big reasons to think that despite raising some revenue, tariffs will actually reduce the US government’s fiscal space and make tax cuts less feasible. The first is that tariffs will shrink the economy, which makes it harder for the government to pay back America’s national debt. Notice that the federal debt-to-GDP ratio goes up in recessions:
A bad economy makes tax revenue go down. And tariffs will weaken the economy not just in the short term, but in the long term as well, making America’s debt harder to finance — and reducing the fiscal space available to do tax cuts.
The other problem with “tariffs allow tax cuts” is that if tariffs increase long-term interest rates — as they now look to be doing — they make the national debt even harder to finance. That reduces the fiscal space for tax cuts even more. So no, tariffs aren’t tax cuts, and they don’t allow you to get away with more tax cuts either.
“Tariffs will bring back American manufacturing”
This is the most commonly cited justification for Trump’s tariffs. In fact, many people on both sides of the debate just assume that tariffs will shift America’s economy from services back toward manufacturing and then argue about whether this will be a good thing or a bad thing.
On its face, this might seem reasonable. Importing fewer manufactured goods means that you have to make those goods domestically…right?
Well, no. Instead of making those goods domestically, Americans could simply do without them. They could consume fewer cars, fewer TVs, fewer phones, and so on. In fact, basic economics predicts that they will do just that. First of all, tariffs shrink the economy and make Americans poorer.2 Poorer people buy fewer things.
Second of all, tariffs raise the prices of manufactured goods more than they raise the price of services. One reason is that America imports more goods than services. But as I keep saying over and over, tariffs also hurt American manufacturing by making imported components more expensive. Even some Trump supporters are already feeling this effect:
Service industries don’t rely on imported components as much, so they get hit less hard by this effect.
When you raise the price of manufactured goods relative to services, people substitute away from goods and toward services. They buy fewer cars and TVs and more health care and restaurant meals, and so on. This shrinks demand for US manufacturing.
In addition, Trump’s tariffs will hurt American export manufacturing a lot. Multinational companies that currently manufacture goods in America to sell to the rest of the world will move those factories overseas because their US factories won’t be able to source the necessary inputs. Retaliation by other countries will also hurt demand for US exports.
And on top of all that, any recession created by tariff policies will devastate US manufacturing, just like recessions typically do. Already, the panic over the tariffs is causing some American factories to shut down and lay off workers:
When you add all of these factors up — deadweight loss, substitution effects, loss of exports, and recession — it’s highly likely that tariffs will actually reduce the number of Americans employed in manufacturing. Tariffs are a force for deindustrialization.
Also note that factory construction, which boomed under Biden, has begun to fall under Trump:
“Tariffs will put the US economy on a more sustainable footing”
This argument is very vague, but some Trump supporters seem to think that the pre-Trump economy was somehow fake or based on funny money and that without something like Trump’s tariffs, it would have all inevitably crashed.
Something a little bit like this has actually happened before. In the 2008 financial crisis, a bunch of unsustainable and basically useless real estate-related financial activity ended up vanishing and crashed the economy in the process. But there’s no reason to think that the US economy was in that sort of situation before Trump came along and started smashing things.
The US federal deficit was (and still is) almost certainly unsustainable. But cutting that deficit, while it may have produced a bit of short-term economic pain, wouldn’t have affected the long-term trajectory of the economy.
No workers or factories or technology or land or other factors of production would have been vaporized by deficit reduction. And so there’s no sense in which US government borrowing was setting the stage for an inevitable crash — we could have just raised taxes and cut spending.
Some Trump supporters argue that the US economy’s orientation toward services rather than manufacturing made it somehow fake. This is an echo of the ideas of Chinese leader Xi Jinping, who cracked down on the software and finance industries in order to redirect resources toward manufacturing.
But there’s nothing more “real” about physical goods than services. The value created by a piece of software is not inherently less real than the value created by the phone that runs that software. The value created by a cancer treatment is not inherently more fake than the value created by a refrigerator. And so on.
And even if you don’t like service industries and the national debt, as I explained in previous sections, there’s just no reason to think tariffs will bring back American industry or make the debt more affordable. So there’s absolutely no way in which tariffs replace a “fake” economy with a “real” one.
“Tariffs will weaken China relative to the United States”
China exports a lot of goods to the US. If you count intermediate goods, the number is even higher. Tariffs on China — which have now reached 145% in the wake of Trump’s latest proclamation — will end up cutting those exports massively, thus hurting Chinese companies and the Chinese economy. So China will be weakened by these tariffs.
But the US will be weakened, too, because tariffs create big economic losses. If Trump’s tariffs were only on China, you could argue that because the US runs a big trade deficit with China, China will be hurt more than the US will be hurt. This isn’t necessarily true, but it would at least be a reasonable argument.
But Trump’s tariffs are on far more countries than just China. Trump’s tariffs cover nearly 100% of all US imports while they only cover 13.7% of China’s exports. Trump is trying to cut America off from all of its suppliers while cutting China off from only a fraction of China’s demand.
It will be a lot easier for China to find alternative buyers for its goods than for America to produce everything in-house. America’s economy under tariffs will become a shrunken, inward-focused thing, while China will simply ignore America and focus on being the factory for the rest of the world.
And while America’s defense-industrial base shrivels from lack of imported inputs, China’s will continue to go from strength to strength — in fact, China may even replace some of the lost US demand by accelerating its military buildup (like America did in World War 2).
The basic fact here is that the US is just a much smaller country than China is. China is much more capable of running a self-contained economy and a self-contained defense-industrial base than America is.
The US would only be able to match China by getting together a big gang of allies, both for military purposes and to build up a manufacturing base with a scale that matches China’s. Trump’s tariffs make it impossible to do that, and thus strengthen China’s hand against America.
Tariffs will hurt China in the absolute sense, but in the relative sense they hurt America more and raise the likelihood that historians will look at the 21st century as the Chinese Century.
“Tariffs will make America more manly”
This is one of the more bizarre arguments in favor of tariffs. Some right-wing talk show hosts and columnists have begun claiming that Trump’s tariffs will make the US economy more manly.
I realize that A) this is a silly thing to say, and B) why should we even care, and C) the main reason Trump’s defenders are saying it is that they want to play to Trump’s base. But let’s take it seriously for a moment. There are actually a few variants of the argument.
The first version is that manufacturing is a man’s job, while desk jobs are for women, so if we shift the economy from services back to manufacturing, American men will be able to do more manly things with their time, surrounded by other men instead of by women.
That seems unlikely to be true. Are Chinese men more manly than Americans because their economy is weighted much more toward manufacturing? How about German men? In general, European countries have more manufacturing-based economies than America does. Do the MAGA people really think Europe is a more manly place than America is? I don’t think so.
But in any case, as I wrote above, Trump’s tariffs will hurt American manufacturing, and there’s a good chance they’ll result in fewer factory jobs instead of more. So much for the remasculinization of America.
The second version of the argument is that American men are depressed and listless and powerless and aimless etc, and that manufacturing jobs will give them the purpose they lack.
In fact, I think something like this could actually happen if the US had a huge national manufacturing effort along the lines of the World War II production effort. And it wouldn’t just be for men, either — recall Rosie the Riveter, and remember that Marilyn Monroe was discovered working in a defense plant.
But, again, we run into the fact that tariffs don’t drive reindustrialization — instead, they do the opposite. Recessions, and the unemployment they bring, are especially bad for American men’s morale.
Remember that many of the benefits that Trump’s apologists believe tariffs would bring — the lower interest rates, the lower inflation, etc. — would only happen if a whole bunch of American men were thrown out of work.
For still others, tariffs are simply a clumsy way of striking out against women in the workplace. Some commentators, such as the blogger Cartoons Hate Her, have suggested that this is because Trump’s younger male supporters believe that reducing women’s job opportunities will raise men’s value in the dating market.
But the economic weakness caused by tariffs will almost certainly reduce American men’s value in the dating market. Unemployed men are certainly less date-able, and tariffs will increase unemployment.
Lower-paid men are generally less date-able and tariffs will reduce wages. Men with less money are generally less date-able and tariffs are already causing stocks and crypto to crash. Remember that marriage and childbirth go down in recessions.3
“Tariffs will force Americans to live more modest, austere lives”
Finally, we get to the argument that more and more Trump supporters are throwing around online. This is the idea that America is too materialistic and that the economic devastation caused by tariffs will liberate us from this materialism, force us to rediscover the pleasure of living more austere lives and free us to focus on more spiritually fulfilling aspects of life:
This sounds a bit like when Herbert Hoover’s Treasury Secretary, Andrew Mellon, initially responded to the Great Depression by saying:
Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate. It will purge the rottenness out of the system…People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.
That didn’t go very well for Hoover.
Some MAGA types even praise the stock market crash for creating economic equality by destroying the wealth of billionaires:
If this sounds like a cheap knockoff of Maoism, well, that’s because it is. As Nathan Confas has written, the MAGA movement looks more communist by the day. Some MAGA thought leaders, like Batya Ungar-Sargon, call themselves “MAGA leftists.”
The obvious rebuttal to this idea is that the original version of communism didn’t exactly fill its subjects with spiritual enrichment, national devotion, or any other sort of noble higher sentiment. People living under the deprivation caused by communism became cynical and intensely materialistic. The communist regimes crumbled because people realized that prosperity was more important than empty government rhetoric.
Why MAGA people think that repeating the epic, generational mistake of communism is a good idea is beyond me. You’d think it would be easy to just look at the history here, and conclude that this approach is doomed to failure.
And yet somehow, despite all the information that the internet has made available, some people still feel the need to repeat old mistakes. Hopefully, the more reasonable majority gets extremely mad and stops them before they’re allowed to turn America into a new Cuba or USSR.
Notes
1 In fact, ChatGPT may have hallucinated the academic paper references that Trump’s team relied on to set its tariff numbers!
2 You can think of this effect as the deadweight loss from taxation, since a tariff is a tax. You can also think of it as the loss of gains from trade. Those are actually the same thing in this case, even though the two concepts are taught in different sections
3 Maybe some Trump supporters hope that if women get hurt even more than men by the tariffs, it’ll increase men’s value in the dating market. But this happened during Covid, and I don’t recall men suddenly becoming in higher demand in 2021 just because women were more likely to have lost their jobs. Anyway, the whole thing is just silly.
This article was first published on Noah Smith’s Noahpinion Substack and is republished with kind permission. Become a Noahopinion subscriber here.
