“We should beware of the demagogues who are ready to declare a trade war against our friends – weakening our economy, our national security, and the entire free world – all while cynically waving the American flag”
Yikes, the economic analysis in this article is not good! The crux of it is--
"The difference is that they make US-made products more profitable, and that is the reason they incentivize more US-based production. The goal is achieved through higher prices."
Yglesis is correct that, tarrifs lead to price increases, which lead to windfall profits for domestic makers, which in turn leads to more investment in US manufacturing (chasing that profit). Yglesis concludes that we would get jobs *and* higher prices. OK. But why stop there?
While prices would likely increase initially in response to tarrifs, investments in US auto manufacturing would increase the supply of untarrifed autos, bringing prices right back down.
So the two important questions are: (1) how much higher could prices peak in the short term as a result of tarrifs, and (2) what would be the steady-state (long-run) increase in prices, if any?
Yglesias seems to address only (1). He makes a compelling case that prices will increase in the near-term, but he seems to sloppily kind of imply that there are long-term costs here, which is far less clear.
In my opinion, heavy tarrifs on imported autos will not affect steady-state auto prices in the US all that much. That's a result of the heavy competition. There are just so many brands competing for a share of the US market. There is no tarrif regime that will circumvent the reality that you have to produce great cars for a low price to sell them into the US market.
It's plausible that prices would be somewhat higher because certain imports could be produced and sold more cheaply (without tarrifs). I just don't think this can be all that much though. Cars manufactured in the US are competitive with imports on quality and cost today. I have a hard time seeing why moving production of some imports into the US would make things much more expensive in the long-run.
Autos just sort of work well with tarrifs because almost all car brands already make some cars in the US, and most cars sold in the US are already made in the US. US makers are already competitive globally and even export a little. Add in the political salience of car manufacturing jobs and you have a policy winner. I still think it's bad policy, but probably one of the least bad sectors to slap tarrifs on.
The tariff uncertainty is the most destructive policy possible. To build a manufacturing base in the US and North America, it requires time and materials. Tariffing China across the board just makes building this manufacturing base even more expensive, and tariffing Mexico and Canada wrecks the NAFTA business model.
This is ironically a benefit to China. Their manufacturing activity expanded in March, bucking their trend of decline.
Republicans gave away the game when they pivoted from ranking the economy as the number one issue heading into the election to defending Trump’s economic arson as “necessary short-term pain”. They would rather impoverish the country than see trans women compete in sports. People with priorities like that aren't going to read this article and see reason. Reason doesn’t factor into any of this for that lot, it's emotion all the way down.
Quasi-sidebar: The more we talk about reshoring brake pad production, the more I equate Trump to Chris Farley’s character in Tommy Boy. We’re all stuck watching Donny Boy and the ending won’t be as happy.
I hope you're correct. The sense I'm increasingly getting is that we're deluding ourselves when we draw a ballot box distinction between "hardcore MAGA Republicans" and what used to be persuadable Republicans. At least until the Democratic party is willing to give rhetorical ground on issues like trans rights, border security, climate action, etc.
Because even when Democrats do something these voters should be happy with (drilling more domestic oil than any other presidential administration, reimposing Trump's border security measures as Biden did closer to the election, etc.), they still distance themselves from the action and make rhetorical appeals to their left flank that just alienates these persuadable voters. And if there's ever been a time where words matter more than actions, it's these addled TikTok brain times.
I think Matt's point about how tariffs will raise prices and ultimately make the country poorer is really important. This is moving us backwards. Once free trade became the norm in this country, we absolutely should have moved forward with a national strategy to leverage the position we were now in and put people to work doing advanced work that could not be outsourced. Failure to do that was a huge mistake, both economically and politically, but a bigger failure would be moving backwards. Imagine if a country successfully moved from an agricultural based economy to an industrial based one and decided "nope, big mistake" and tried to undo it. Insanity.
While tariffs, in general, are bad, what do you think about the idea of tariffs specifically on oil as a strategy to balance climate change vs. the jobs of people who work in the oil industry? Such a policy would essentially say that we want to reduce oil consumption overall, but we prefer that what oil we do consume to be produced domestically, rather than imported. In other words, use oil tariffs as sort of a back-door carbon tax.
I think such a policy is worth looking at and might fall under a very narrow case where tariffs make some sort of sense. But, only because consumption of oil has negative externalities we want to reduce, and is definitely not something we want for general economic activity, which we want to encourage.
The tariffs are ostensibly about helping manufacturing, but let’s focus on treating the disease instead of the symptoms.
A smart guy with a cheap laptop can start some kind of internet business in his spare bedroom. But if you actually want to MAKE something – a physical, tangible product – you need to raise millions from investors who will wait patiently while you build and test prototypes, order tooling and materials, set up your production line, hire and train workers and hope to hell the customers actually show up.
Adding to this very challenging process is public policy which, on so many levels, is hostile to manufacturing.
On the local level you have zoning and permitting processes that not only delay the opening of your factory but also obstruct the development of affordable housing for your employees. At the state and federal levels, you have workplace, product and environmental regulations that are often devoid of all common sense and cost effectiveness, that value process and paperwork over results.
And also at the federal level, you have fiscal and monetary policies that maintain distorted currency valuations, putting your American made “widget” at a distinct disadvantage against international competitors.
Finally, if after running this gauntlet you manage to turn a profit, it will be taxed three ways: The “revenue minus expenses” income of your business, and the dividends and capital gains paid out to those patient investors.
I just have to take a moment to absorb that MATT'S SON NEEDS A CAR? I remember when Matt was posting about his six-year-old. I would have guessed eight.
> Businesspeople should be thinking about new products, about marketing and improving how they make stuff, not waiting on pins and needles for the latest diktat from the central planning committee about where they’re allowed to buy aluminum from.
If this is the $25,000 Pyramid, this goes under "things I expect to need to explain to a socialist."
A trade agenda to promote economic growth and good jobs should be about exporting more, not importing less.
Exports support ten million jobs (per the Commerce Department), and those tend to be better paying jobs. Rather than jeopardize those jobs with a trade war, we should seek to increase exports with free trade agreements, and (ok, this is the hard part) getting the budget deficit under control.
Our huge budget deficit sets off a row of fiscal and monetary dominoes that essentially enables and finances the trade deficit. To a large extent we “balance” our trade by exporting Treasury bills and newly printed dollars instead of products.
The other missing part of this discussion is the tariffs that are placed on the us by other countries. Have these harmed the US? Would a tariff free world economy be better for the USA? If so how can we achieve this? If no, then what do tariffs look like?
This seems like the perfect mirror of Matt's "Biden tried post-neoliberalism and it didn't work".
MAGA already has the information it needs to know "tariff-centric economic nationalism will be a disaster" but it needs to play out before they can go back to "free markets and subsidize defense industries" or whatever. But even then zombie-MAGA will be going around saying that the GOP didn't fully commit to the one truth path of tariff mania because they had too many elites or whatever.
Depressing that right-wing America has no real ideas of its own - it's leading lights are just cast off remnants of failed progressive ideas, but that is just the reality of the wonk gap. Not unlike Communist China's embrace of the One Child Policy after the West flirtation and rejection of Paul Erhlich's Population Bomb. It's not epistemology, its the prophetic revelations of a cargo cult. It simply cannot work because it never understood the ideas its stealing from.
I’m a proponent that democracy is assuming voters know what they want and they should get it good and hard. Trump ran on his nutjob ideas and we should get them. Let’s see how smart Trump actually is
I like this idea, except that I know lots of people who are about to retire, or work in fields related to health research. My friend's law firm is being investigated by the EEOC for anti-white bias.
My ideal scenario is Trump dies, and Vance goes back to governing like a typical Republican. He has the charm of cardboard, and I think we can beat him in 2028.
But realistically, I think Trump will live well into his nineties, even as his brain turns to mush.
Unfortunately, Vance was on the "industrial policy" bandwagon before getting picked by Trump, so I think we are screwed either way, although he might be somewhat less likely to invade Canada and Greenland, so there's that.
I think it's a political schtick. He's a Yale graduate who used to work in venture capital in San Francisco. His book Hillbilly Elegy drips with contempt for his WV neighbors.
He'd keep all the anti-woke stuff, and pay lip service to manufacturing, but his primary interests would be a roaring stock market and low taxes.
Some of the MAGA types, including Vance, implicitly acknowledge Matt's point with comments like "there's more to life/the American dream than cheap goods from Asia," etc. The implication being that life would be better with expensive goods from America. This is obviously a political loser (hence the jawboning), and also very Marie Antoinette of them, since I'm certain they don't aspire to have their kids work in the foundry making the rear differential bushing, much less the circuit boards, toasters or T-shirts they wear.
“We should beware of the demagogues who are ready to declare a trade war against our friends – weakening our economy, our national security, and the entire free world – all while cynically waving the American flag”
Guess the President.
Yikes, the economic analysis in this article is not good! The crux of it is--
"The difference is that they make US-made products more profitable, and that is the reason they incentivize more US-based production. The goal is achieved through higher prices."
Yglesis is correct that, tarrifs lead to price increases, which lead to windfall profits for domestic makers, which in turn leads to more investment in US manufacturing (chasing that profit). Yglesis concludes that we would get jobs *and* higher prices. OK. But why stop there?
While prices would likely increase initially in response to tarrifs, investments in US auto manufacturing would increase the supply of untarrifed autos, bringing prices right back down.
So the two important questions are: (1) how much higher could prices peak in the short term as a result of tarrifs, and (2) what would be the steady-state (long-run) increase in prices, if any?
Yglesias seems to address only (1). He makes a compelling case that prices will increase in the near-term, but he seems to sloppily kind of imply that there are long-term costs here, which is far less clear.
In my opinion, heavy tarrifs on imported autos will not affect steady-state auto prices in the US all that much. That's a result of the heavy competition. There are just so many brands competing for a share of the US market. There is no tarrif regime that will circumvent the reality that you have to produce great cars for a low price to sell them into the US market.
It's plausible that prices would be somewhat higher because certain imports could be produced and sold more cheaply (without tarrifs). I just don't think this can be all that much though. Cars manufactured in the US are competitive with imports on quality and cost today. I have a hard time seeing why moving production of some imports into the US would make things much more expensive in the long-run.
Autos just sort of work well with tarrifs because almost all car brands already make some cars in the US, and most cars sold in the US are already made in the US. US makers are already competitive globally and even export a little. Add in the political salience of car manufacturing jobs and you have a policy winner. I still think it's bad policy, but probably one of the least bad sectors to slap tarrifs on.
One of the great Springsteen tunes is Factory, describing how great these factory jobs were:
"Men walk through these gates with death in their eyes"
Early in the morning, factory whistle blows
Man rises from bed and puts on his clothes
Man takes his lunch, walks out in the morning light
It's the work (the work), the working (the working), just the working life (just the working life)
Through the mansions of fear, through the mansions of pain
I see my daddy walking through them factory gates in the rain
Factory takes his hearing, factory gives him life
The work (the work), the working (the working), just the working life (just the working life)
End of the day, factory whistle cries
Men walk through these gates with death in their eyes
And you just better believe, boy
Somebody's gonna get hurt tonight
The working (the working), the working (the working), just the working life (just the working life)
Go hitch, the working (the working), the working (the working), just the working life (just the working life)
One of the most educational articles on tariffs I ahve ever seen
The tariff uncertainty is the most destructive policy possible. To build a manufacturing base in the US and North America, it requires time and materials. Tariffing China across the board just makes building this manufacturing base even more expensive, and tariffing Mexico and Canada wrecks the NAFTA business model.
This is ironically a benefit to China. Their manufacturing activity expanded in March, bucking their trend of decline.
https://www.bloomberg.com/news/articles/2025-03-31/china-factory-activity-expands-before-expected-trump-tariffs?embedded-checkout=true
Republicans gave away the game when they pivoted from ranking the economy as the number one issue heading into the election to defending Trump’s economic arson as “necessary short-term pain”. They would rather impoverish the country than see trans women compete in sports. People with priorities like that aren't going to read this article and see reason. Reason doesn’t factor into any of this for that lot, it's emotion all the way down.
Quasi-sidebar: The more we talk about reshoring brake pad production, the more I equate Trump to Chris Farley’s character in Tommy Boy. We’re all stuck watching Donny Boy and the ending won’t be as happy.
It's not about convincing hardcore MAGA Republicans, it's about convincing everyone else, which is probably 65-70% of the country.
I hope you're correct. The sense I'm increasingly getting is that we're deluding ourselves when we draw a ballot box distinction between "hardcore MAGA Republicans" and what used to be persuadable Republicans. At least until the Democratic party is willing to give rhetorical ground on issues like trans rights, border security, climate action, etc.
Because even when Democrats do something these voters should be happy with (drilling more domestic oil than any other presidential administration, reimposing Trump's border security measures as Biden did closer to the election, etc.), they still distance themselves from the action and make rhetorical appeals to their left flank that just alienates these persuadable voters. And if there's ever been a time where words matter more than actions, it's these addled TikTok brain times.
I think Matt's point about how tariffs will raise prices and ultimately make the country poorer is really important. This is moving us backwards. Once free trade became the norm in this country, we absolutely should have moved forward with a national strategy to leverage the position we were now in and put people to work doing advanced work that could not be outsourced. Failure to do that was a huge mistake, both economically and politically, but a bigger failure would be moving backwards. Imagine if a country successfully moved from an agricultural based economy to an industrial based one and decided "nope, big mistake" and tried to undo it. Insanity.
While tariffs, in general, are bad, what do you think about the idea of tariffs specifically on oil as a strategy to balance climate change vs. the jobs of people who work in the oil industry? Such a policy would essentially say that we want to reduce oil consumption overall, but we prefer that what oil we do consume to be produced domestically, rather than imported. In other words, use oil tariffs as sort of a back-door carbon tax.
I think such a policy is worth looking at and might fall under a very narrow case where tariffs make some sort of sense. But, only because consumption of oil has negative externalities we want to reduce, and is definitely not something we want for general economic activity, which we want to encourage.
The tariffs are ostensibly about helping manufacturing, but let’s focus on treating the disease instead of the symptoms.
A smart guy with a cheap laptop can start some kind of internet business in his spare bedroom. But if you actually want to MAKE something – a physical, tangible product – you need to raise millions from investors who will wait patiently while you build and test prototypes, order tooling and materials, set up your production line, hire and train workers and hope to hell the customers actually show up.
Adding to this very challenging process is public policy which, on so many levels, is hostile to manufacturing.
On the local level you have zoning and permitting processes that not only delay the opening of your factory but also obstruct the development of affordable housing for your employees. At the state and federal levels, you have workplace, product and environmental regulations that are often devoid of all common sense and cost effectiveness, that value process and paperwork over results.
And also at the federal level, you have fiscal and monetary policies that maintain distorted currency valuations, putting your American made “widget” at a distinct disadvantage against international competitors.
Finally, if after running this gauntlet you manage to turn a profit, it will be taxed three ways: The “revenue minus expenses” income of your business, and the dividends and capital gains paid out to those patient investors.
I just have to take a moment to absorb that MATT'S SON NEEDS A CAR? I remember when Matt was posting about his six-year-old. I would have guessed eight.
> Businesspeople should be thinking about new products, about marketing and improving how they make stuff, not waiting on pins and needles for the latest diktat from the central planning committee about where they’re allowed to buy aluminum from.
If this is the $25,000 Pyramid, this goes under "things I expect to need to explain to a socialist."
We live in upside-down world.
A trade agenda to promote economic growth and good jobs should be about exporting more, not importing less.
Exports support ten million jobs (per the Commerce Department), and those tend to be better paying jobs. Rather than jeopardize those jobs with a trade war, we should seek to increase exports with free trade agreements, and (ok, this is the hard part) getting the budget deficit under control.
Our huge budget deficit sets off a row of fiscal and monetary dominoes that essentially enables and finances the trade deficit. To a large extent we “balance” our trade by exporting Treasury bills and newly printed dollars instead of products.
The other missing part of this discussion is the tariffs that are placed on the us by other countries. Have these harmed the US? Would a tariff free world economy be better for the USA? If so how can we achieve this? If no, then what do tariffs look like?
This seems like the perfect mirror of Matt's "Biden tried post-neoliberalism and it didn't work".
MAGA already has the information it needs to know "tariff-centric economic nationalism will be a disaster" but it needs to play out before they can go back to "free markets and subsidize defense industries" or whatever. But even then zombie-MAGA will be going around saying that the GOP didn't fully commit to the one truth path of tariff mania because they had too many elites or whatever.
Depressing that right-wing America has no real ideas of its own - it's leading lights are just cast off remnants of failed progressive ideas, but that is just the reality of the wonk gap. Not unlike Communist China's embrace of the One Child Policy after the West flirtation and rejection of Paul Erhlich's Population Bomb. It's not epistemology, its the prophetic revelations of a cargo cult. It simply cannot work because it never understood the ideas its stealing from.
I’m a proponent that democracy is assuming voters know what they want and they should get it good and hard. Trump ran on his nutjob ideas and we should get them. Let’s see how smart Trump actually is
I like this idea, except that I know lots of people who are about to retire, or work in fields related to health research. My friend's law firm is being investigated by the EEOC for anti-white bias.
My ideal scenario is Trump dies, and Vance goes back to governing like a typical Republican. He has the charm of cardboard, and I think we can beat him in 2028.
But realistically, I think Trump will live well into his nineties, even as his brain turns to mush.
Unfortunately, Vance was on the "industrial policy" bandwagon before getting picked by Trump, so I think we are screwed either way, although he might be somewhat less likely to invade Canada and Greenland, so there's that.
I think it's a political schtick. He's a Yale graduate who used to work in venture capital in San Francisco. His book Hillbilly Elegy drips with contempt for his WV neighbors.
He'd keep all the anti-woke stuff, and pay lip service to manufacturing, but his primary interests would be a roaring stock market and low taxes.
People who didn't vote for Trump should "get it good and hard"?
I believe in majority rule
It's a simple yes or no question
Yes
Some of the MAGA types, including Vance, implicitly acknowledge Matt's point with comments like "there's more to life/the American dream than cheap goods from Asia," etc. The implication being that life would be better with expensive goods from America. This is obviously a political loser (hence the jawboning), and also very Marie Antoinette of them, since I'm certain they don't aspire to have their kids work in the foundry making the rear differential bushing, much less the circuit boards, toasters or T-shirts they wear.