Last month, President Donald Trump proudly announced, “Liberation Day! … The day American industry was reborn!”
Reborn because of his tariffs, which he called, “the most beautiful word in the dictionary.”
This is just wrong.
The first time he was president, Trump raised tariffs on steel. That helped American steelmakers. They hired 1,000 more workers. Yippee.
But more American companies make things out of steel. They were hurt. The result: America lost about 75,000 jobs.
Gain a thousand jobs, lose 75,000. Doesn’t sound like “liberation” to me.
Biden didn’t learn the lesson. He increased Trump’s tariffs.
That’s Myth 1: Tariffs protect American jobs.
Myth 2: We need tariffs because America runs trade deficits with other countries.
We do run deficits. Our trade deficit with China so far this year is more than $70 billion.
So what? I run a trade deficit with my supermarket. I give them money. They never give me money.
That’s fine. It’s freedom. The economy sorts it out.
There’s nothing bad about a trade deficit or good about a surplus. America ran a trade surplus during the Great Depression.
Myth 3: We need tariffs because global trade hollowed out America’s manufacturing base.
I hear that all the time, from politicians, comments on my X (formerly Twitter) feed and media commentators.
“Disastrous economic policies have hollowed out the manufacturing base, sending jobs and production overseas,” influencer Mario Nawfal posted on X.
“Large and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base,” reads a White House fact sheet.
It’s silly. They’re just wrong.
American industrial output is near an all-time high.
Unemployment, now at 4.2%, is much lower than it was when I grew up.
Politicians never learn. In 1930, at the start of what became the Great Depression, clueless legislators Reed Smoot and Willis Hawley got Congress to pass what became known as the Smoot-Hawley Tariff Act.
“It deepened and lengthened the Depression,” writes the Foundation for Economic Education.
Still, Trump is right to complain about countries that put nasty tariffs on American goods. In my new video, his press secretary points out that “Canada … (imposes a) nearly 300% tariff … (on) American cheese and butter … India, a 150% tariff on American alcohol.”
This mostly hurts Canadian and Indian consumers, but it also hurts American businesses.
Seems sensible, then, for Trump to pressure those countries and get them to lower their tariffs.
And Trump says he’s making deals! He got China to reduce tariffs to 10%.
But China charged 8% before Trump raised tariffs during his first term. Sigh …
Some countries, in response to Trump’s moves, raised their tariffs. Canada announced retaliatory tariffs on $107 billion worth of U.S. goods.
Some small business owners, some with the help of the Liberty Justice Center, have sued Trump, arguing that his use of emergency powers to enact the fees was illegal.
“If this is the end of my American dream,” says one, “I’m going to go down swinging.”
Wine importer Victor Schwartz says there’s only one way out for Trump.
“Admit you made a bad decision and let’s move on. That’s what we do in business all the time. Free trade is really a beautiful thing.”
It is. We rarely notice how it enriches us, but it does. By bringing in cheaper goods and services from all around the world, it lets American workers specialize in areas where Americans do things best.
That leaves almost all of us better off.
Politicians should leave that alone.
Photo by Carl Tronders on Unsplash
Thank you John Stossel for speaking out and not being afraid of this man. Also, thank you for interviewing Yaron Brook earlier and publishing the full length interview.
“In my new video, his press secretary points out that “Canada … (imposes a) nearly 300% tariff … (on) American cheese and butter”
That tariff (250% that’s one heck of a rounding up) is only for over quota in the USMCA agreement and there are US quotas and tariffs in that agrement as well. It’s never been imposed-quota never met or exceeded. Canadians bought $650 USD worth of dairy in 2024. The average Canadian buys $6.6K of US made goods a year and our GDP per capita is about $54K USD. The average American buys $1.2K of Canadian goods with a third being unrefined crude oil bought at a discount with a GDP per capita of $83K. What does fair mean?
Appreciate the thoughtful essay. What are your thoughts though about using tariffs to force trade negotiations in order to create a more level playing field between us & other countries?
That may be Trump’s intent. It’s a little hard to say, because I think he’s also claimed that he sees tariffs staying in place forever. But if it is just a negotiating tactic, then I think there are two points to consider:
1) Couldn’t we have launched this same negotiation without all the market and economic turmoil?
2) If the goal was to negotiate a better deal, then we have to carefully assess the results based on the actual merits of that deal. This administration (like all of them) likes to tout the benefits of an agreement before all of the details have been worked out, before anything has been signed, and without any clear or concrete penalties for lack of follow-through. By the time the deal is actually signed, it doesn’t make the news, as the politicians on both sides know.
“I run a trade deficit with my supermarket. I give them money. They never give me money.” Yeah, but if couple of your family members are selling groceries too, then instead of helping your family, you are helping non relatives. Why did you think China became rich? Because we are buying most of their products. So buy American products and services to help our fellow citizens!
I often agree with your stories but in this case we are on opposite sides. We cannot continue to not allow other countries to sell their goods here at relatively low tariff rates while those same countries levy extremely high tariffs on our goods to put them out of reach of their citizens. That is one reason you see fee American automobiles in Europe and so many Asian and European makes in the US, and that’s only one product.
Most likely an oversimplification of a complex issue…
#1 increased tariffs may be a negotiating tool to get other countries to drop their tariffs or some other behavior that should be corrected (like Mexico allowing all of South America to walk through their country on the way to the US). That’s necessary if we are to have true free international trade. #2 is independence & safety. We can’t maintain a war with a country that supplies all our needs. An enemy might identify that weakness and be emboldened to press the US in many regions and on many issues.
We don’t need Mexico to help us guard our southern border. WE have been ignoring OUR responsibly to guard OUR country from illegal immigration. WE have been LETTING people come here illegally.
I’ve heard Trump talk about using tariffs for revenue. I LIKE that idea.
Except Trump wants to do this AFTER using tariffs for other reasons. I think this should be done INSTEAD of other reasons for tariffs.
We can use the private sector to help each other better afford things made in America. But we need to make the EFFORT to do this in the free market, not expect the free market to do this for us.
We don’t need to use tariffs for leverage on Canada and Mexico to get them to help us guard our borders. We can do that on our own. People come here illegally because we’ve been irresponsible and not guarding our borders as we should. We can but we don’t.
If our manufacturing is good enough, tariffs won’t stop people in other countries from buying our products. So we don’t need to use tariffs for leverage to get other countries to lower their tariffs.