Beware Bad Arguments About Tariffs

By Judson Berger

Friday, April 04, 2025

 

The only thing more confusing than trade policy is trying to sift through the bad arguments put forward to justify an arch-protectionist version of it.

 

With “liberation day” in the rearview — along with, perhaps, affordable prices once global 10 percent tariffs, steeper rates on so-called worst offenders, and 25 percent tariffs on foreign cars all take effect — writers here have spent the better part of the week (also, year) tracking a spring pollen-storm of specious arguments about trade in an effort to give the full picture.

 

Let’s dive right in.

 

President Trump, at the Rose Garden on Wednesday, called these “kind reciprocal” tariffs, since the higher rates are supposedly just half of what those trading partners charge us. Not really. They’re more like a penalty applied to foreign trade, Noah Rothman writes. Dominic Pino breaks down the fuzzy math behind Trump’s tariff table. National Review’s editorial explains what actually went into the administration’s calculated rates:

 

These numbers are far in excess of the tariffs that countries impose on U.S. goods — because the formula used to calculate them has nothing to do with tariffs. Instead, it is the trade deficit divided by the amount of imports. The tariffs levied are either 10 percent or half of that trade deficit ratio, whichever is higher. If the U.S. has a trade surplus with a country (and the U.S. has a trade surplus with over 100 countries), it is set at 10 percent automatically.

 

In effect, it’s a 10 percent minimum tariff for all imports, with many top U.S. trade partners facing much higher rates. There’s no consideration given to alliances. Taiwanese goods are taxed at 32 percent, South Korean goods at 25 percent, and Japanese goods at 24 percent.

 

Trump said chronic trade deficits constitute a “national emergency that threatens our security.” Rich Lowry explains why “emergency” doesn’t remotely apply. NR’s editorial, once more:

 

If trade deficits were inherently bad, we’d expect poor countries to have trade deficits and rich countries to have trade surpluses. In the real world, there’s basically no relationship, which is why economists don’t pay much attention to it. The United Kingdom, Japan, Egypt, and Uganda have trade deficits; Australia, the Netherlands, Russia, and Angola have trade surpluses.

 

Veronique de Rugy addresses some of Trump’s other Rose Garden claims here.

 

Vice President JD Vance suggested that arguing for free trade is like arguing “it should be illegal for the United States to control our borders, because that makes it impossible for employers to buy and sell labor at the price they choose.” But Dan McLaughlin counters that things and people are not the same: “Regulation of immigration, and limits on its scale, are mostly about the noneconomic factors. . . . A lot of those factors have no parallel in trade policy. Cars don’t take citizenship oaths. Two-by-fours don’t deal drugs or commit rape. Maple syrup doesn’t hijack airplanes. Aluminum doesn’t have babies. Computer chips don’t vote.”

 

A White House fact sheet says “studies have repeatedly shown that tariffs can be an effective tool for reducing or eliminating threats to impair U.S. national security and achieving economic and strategic objectives.” Dominic looks at those studies and finds that one of them is an article on the website of a lobbying group, one of them determined tariffs on China hurt the auto-parts industry, and another was . . . also from the lobbying group, using a model “based on misreading multiple economics papers that end up finding the opposite of what the authors suggest.”

 

Trump said last weekend he doesn’t care if foreign automakers raise prices over tariffs, “because people are going to start buying American cars.” Peter Navarro says the president’s 25 percent tariff on imported cars and car parts will bring in billions to the U.S. Treasury, with minimal or manageable impact on automakers and consumers. Noah examines historical precedent as well as the reality that no matter how much automakers might respond to pressure to keep prices low, consumers could not be entirely shielded:

 

Consumers would experience shortages, fewer available options, and lower quality: all conditions that induce some predictable behaviors from consumers and producers alike.

 

“Automakers may spread that cost between U.S.-produced and imported models, cut back on features, and in some cases, stop selling affordable models aimed at first-time car buyers, as many of those are imported and less attractive if they carry a higher price tag,” Reuters reported. In the short term, carmakers that are less exposed to foreign supply chains may suffer lower revenue to crowd upstarts out of the market. In the long run, “major automakers would have to decide whether to ride out tariffs on a bet that they won’t last,” the dispatch added. But because most car and parts-makers will have to shift at least some additional costs onto consumers, “tariffs will cause annual U.S. vehicle sales to fall to a range of 14.5 million to 15 million in coming years from 16 million in 2024.”

 

To be fair: Even if Trump’s trade war is enormously economically risky, Jim Geraghty acknowledges that the president “does have a point that a bunch of our biggest trading partners have higher tariffs on our goods than we charge on theirs.” You can review the various rates that other nations impose on our goods here. (Jim follows up to note that the rates announced Wednesday “bear no resemblance” to the rates identified by the International Trade Administration.) Sharing the cover with Dominic’s free-trade manifesto, Michael Brendan Dougherty argued in the latest issue of NR that free-traders should make an exception, where China is concerned.

 

Whether the sought-after correction is worth the chaos — that’s the $100 billion question. Projecting calm amid the storm, Michael Strain argues in these digital pages that our strong economy can absorb the damage likely to come from tariffs — and that “the laws of political gravity have not been suspended.” That is, related price increases can be expected to hurt Trump’s approval rating, causing lawmakers to push back and perhaps Trump to pull back, in time.

 

Then again, Trump has defied the laws of political gravity before.