“As a congressman, he wrote what came to be known as the “McKinley tariff” of 1890, and as president he signed another increase in 1897.
But a funny thing happened after the U.S. came out of the Panic (and subsequent four-year depression) of 1893: Goosed by sharp increases in domestic iron and copper production, Americans had too many goods chasing too few consumers. And McKinley himself began agitating to tear down some of those trade barriers.
“What we produce beyond our domestic consumption must have a vent abroad,” he said in September 1901 at the Pan-American Exposition in Buffalo, New York. “The excess must be relieved through a foreign outlet, and we should sell everywhere we can, and buy wherever the buying will enlarge our sales and productions, and thereby make a greater demand for home labor. The period of exclusiveness is past,” he continued. “The expansion of our trade and commerce is the pressing problem. Commercial wars are unprofitable….If perchance some of our tariffs are no longer needed, for revenue or to encourage and protect our industries at home, why should they not be employed to extend and promote our markets abroad?”
McKinley’s presidency was ended by an assassin’s bullet the very next day.
Even before his late-life pivot to freer trade, McKinley had long been a champion of reciprocity, i.e., the bilateral, mutually beneficial reduction of targeted, asymmetrical tariffs. Or, as he put it in his first inaugural address, “the opening up of new markets for the products of our country, by granting concessions to the products of other lands that we need and cannot produce ourselves, and which do not involve any loss of labor to our own people, but tend to increase their employment.”
In his second term, Trump has demonstrated less enthusiasm for reciprocity than he has for the other two Rs of traditional protectionism, revenue and restriction. Asked last October by Joe Rogan whether he was serious about replacing the federal income tax with tariffs, Trump said, “Yeah, sure. Why not?”—and then engaged in some historical revisionism.”
…
“the tariff system and perennial adjustments thereof was a cornucopia of corruption, putting the gilded in Gilded Age. Far from being a sophisticated manipulation of import/export duties to nurture nascent industries, the tariff schedule was a Christmas tree decorated by special interests.”
“As ugly as the stock market losses have been, the big hit from Trump’s tariffs probably haven’t even arrived yet. As always, the stock market is not the economy—it’s an aggregated indicator of what investors think the economy will look like in the future. Right now, they think it will be bad. Really bad.”
…
“In addition to crashing Americans’ retirement accounts and wiping out huge amounts from American companies (Apple and Nike were among the biggest losers in Friday’s rout), Trump’s move will soon raise taxes, wreck supply chains, and make basic goods more expensive or difficult to obtain.
In other words, even if you aren’t affected by the stock market sell-off, you’ll feel the effects of the tariffs before long.
Take each of those things in order. First, the tax increase. Tariffs are a form of taxation. According to the Yale Budget Lab’s analysis, Trump’s tariffs will reduce the average household’s income by nearly $3,800 this year. That’s because lots of things will get more expensive. Tariffs could triple the cost of a new iPhone, for example.
Second, the supply chain chaos. Ryan Peterson is the CEO of Flexport, a tech platform that helps companies with global logistics. He reported last week that 28 percent of the companies in Flexport’s system are “pausing all ocean freight bookings from Asia until there’s more clarity on where tariffs will end up.”
That means that even if some American companies are willing to pay the tariffs to keep supply chains flowing, they may not be able to find importers and shipping services right now.
Finally, the tariffs (and the associated supply chain disruptions) will have an immediate impact on prices and the availability of goods.
“A trade war triggered by Trump’s chaotic tariffs is the same type of aggregate shock as the Covid crisis, but worse,” warns Ben Golub, a professor of economics at Northwestern. As the tariffs degrade the ability of modern international supply chains to function, he wrote on X, the results will be “supply shortages and price spikes.”
To give just one example, consider the morning cup of coffee you might still be nursing. Americans consumed 1.6 billion pounds of coffee last year, but the United States produces only about 11 million pounds annually (all of it in Hawaii).
America also exports a lot of coffee—more than $900 billion of it last year. That’s possible even though we don’t grow very much here, because America-based coffee companies can buy beans from other countries, roast them, and then export them abroad. What are those middle-of-the-supply-chain companies supposed to do? Coffee-drinkers are screwed and coffee exporting companies that employ American workers are doubly boned.
Now repeat that same process for every industry connected to global supply chains. It’s grim.”
Companies don’t know where to make investments because they don’t know what tariffs will be in the future. The uncertainty of Trump’s tariff policy is horrible for the economy.
Stable protectionism is bad for the economy, but unstable protectionism is much worse.
“A deal to spin off the U.S. assets of TikTok was put on hold after China indicated it would not approve the deal following President Donald Trump’s tariffs announcement this week, according to two sources familiar with the matter.
Trump on Friday extended by 75 days a deadline for ByteDance to sell U.S. assets of the popular short video app to a non-Chinese buyer, or face a ban that was supposed to have taken effect in January under a 2024 law.”
‘Trump is post-literate, meaning he can use social media, but doesn’t read books. He doesn’t understand the origin, history, and nature of the Western alliance because he hasn’t taken the time to understand it. That would require reading.’
Trump doesn’t understand complex global supply chains.
““I’ve been talking about it for 40 years, because I saw what was happening,” he said, referencing old interviews from when he was “young, very handsome.”
“I’d be talking about how we were being ripped off by these countries,” he continued. “I mean, nothing changes very much. The only thing to change was the countries, but nothing really changes.””