TEN POINTS ON TARIFFS Tariffs are not a good idea for the US....
Balaji@balajis
45 views
Mar 13, 2025
~3 min read
1
TEN POINTS ON TARIFFS
Tariffs are not a good idea for the US. Deregulation should be pursued instead. Here's why.
(1) Tariffs only protect the home market. First, at best, tariffs protect the US home market. But China only sends ~16% of its goods to the US! So even Trump's 10% tariff doesn't phase them, because they are selling 84% to other countries:
(2) Tariffs hurt allies. Next, as the US imposes tariffs on allies, they become less likely to abide by US-requested trade restrictions on China. For example, the Netherland is no longer classifying ASML machines as dual-use, opening them up for China.
(3) Tariffs are small incentives at high costs. Third, tariffs are at best a small incentive on the margins to manufacture in the US. A producer might make more money over the long run if a tariff is sure to persist. But these huge tariffs keep blinking in and out, which is the worst of all worlds. The uncertainty means you can't plan on tariffs being there tomorrow, and the high cost means you can't ignore them when they are imposed today. Breaking supply chains in this way just wrecks anyone exporting or importing into the US.
(4) Tariffs don't help exports. Once retaliatory tariffs are imposed, US companies become even less competitive abroad in the 100+ countries where American and Chinese products compete. In fact, US tariffs open the door for China to move into Western Europe, Canada, and Mexico — the only places it hasn't yet become the dominant trade partner:
(5) Tariffs aren't specific. Remember, the US has a money printer! So it can just directly invest in specific industries it thinks are strategic, rather than adopting the extremely imprecise instrument of tariffs. Subsidizing alcohol to Canada is not strategic.
(6) Tariffs aren't realistically autarkic. There are only 77M MAGA but almost 1B+ in the EU, Japan, South Korea, Canada, Australia, and New Zealand combined. There is just no way that 77M MAGA can produce as much as that "Golden Billion" economic union set up at great expense over 80 years. If you push the world to make everything autarkically within a single country, then China wins — because it has 1B+ scale.
(7) Tariffs are irrational nationalism. Relatedly, tariffs do not correctly implement the who/whom or friend/enemy distinction. MAGA should understand that many allies like @PierrePoilievre are non-American, while many declared enemies are Blue Americans. If you're alienating Canadian conservatives while subsidizing the American far left, you're doing it wrong:
(8) Tariffs are a diplomatic loser. While the US is alienating economic allies, China is signing free trade agreements (FTAs) with dozens of countries. The PRC has ~25 signed and 18 more on the way.
(9) Tariffs are an unnecessary fight. Given that Republicans already inherited a Hot War with Russia, a Cold War with China, and a Cold Civil War with Democrats...why open up completely new conflicts with Canada (!?)
(10) Tariffs aren't deregulation. Finally, easing domestic regulation is far better for improving production than adding new regulations in the form of tariffs. Because deregulation doesn’t cause retaliation, and it also unlocks new production. There is political will to deregulate, so why not do that?
TLDR: don't increase regulation via tariffs. Deregulate instead.
Tariffs are not a good idea for the US. Deregulation should be pursued instead. Here's why.
(1) Tariffs only protect the home market. First, at best, tariffs protect the US home market. But China only sends ~16% of its goods to the US! So even Trump's 10% tariff doesn't phase them, because they are selling 84% to other countries:
(2) Tariffs hurt allies. Next, as the US imposes tariffs on allies, they become less likely to abide by US-requested trade restrictions on China. For example, the Netherland is no longer classifying ASML machines as dual-use, opening them up for China.
(3) Tariffs are small incentives at high costs. Third, tariffs are at best a small incentive on the margins to manufacture in the US. A producer might make more money over the long run if a tariff is sure to persist. But these huge tariffs keep blinking in and out, which is the worst of all worlds. The uncertainty means you can't plan on tariffs being there tomorrow, and the high cost means you can't ignore them when they are imposed today. Breaking supply chains in this way just wrecks anyone exporting or importing into the US.
(4) Tariffs don't help exports. Once retaliatory tariffs are imposed, US companies become even less competitive abroad in the 100+ countries where American and Chinese products compete. In fact, US tariffs open the door for China to move into Western Europe, Canada, and Mexico — the only places it hasn't yet become the dominant trade partner:
(5) Tariffs aren't specific. Remember, the US has a money printer! So it can just directly invest in specific industries it thinks are strategic, rather than adopting the extremely imprecise instrument of tariffs. Subsidizing alcohol to Canada is not strategic.
(6) Tariffs aren't realistically autarkic. There are only 77M MAGA but almost 1B+ in the EU, Japan, South Korea, Canada, Australia, and New Zealand combined. There is just no way that 77M MAGA can produce as much as that "Golden Billion" economic union set up at great expense over 80 years. If you push the world to make everything autarkically within a single country, then China wins — because it has 1B+ scale.
(7) Tariffs are irrational nationalism. Relatedly, tariffs do not correctly implement the who/whom or friend/enemy distinction. MAGA should understand that many allies like @PierrePoilievre are non-American, while many declared enemies are Blue Americans. If you're alienating Canadian conservatives while subsidizing the American far left, you're doing it wrong:
(8) Tariffs are a diplomatic loser. While the US is alienating economic allies, China is signing free trade agreements (FTAs) with dozens of countries. The PRC has ~25 signed and 18 more on the way.
(9) Tariffs are an unnecessary fight. Given that Republicans already inherited a Hot War with Russia, a Cold War with China, and a Cold Civil War with Democrats...why open up completely new conflicts with Canada (!?)
(10) Tariffs aren't deregulation. Finally, easing domestic regulation is far better for improving production than adding new regulations in the form of tariffs. Because deregulation doesn’t cause retaliation, and it also unlocks new production. There is political will to deregulate, so why not do that?
TLDR: don't increase regulation via tariffs. Deregulate instead.