2 Reasons Why Trump Loves Tariffs
Trump Said "Tariff" is the Most Beautiful Word in the Dictionary
“I could stand in the middle of Fifth Avenue and shoot somebody, and I wouldn’t lose any voters, OK? … It’s, like, incredible.” - Donald J. Trump (2016)
“Tariff is the most beautiful word in the dictionary.” - Donald Trump (2025)
Hello,
In a recent conversation with Sam Harris, Jonah Goldberg, said that “one of the attractions that people don’t seem to understand as to why Trump loves tariffs so much, is that historically tariffs are the biggest driver of political corruption. Every single interest either asks for an exemption to tariffs or asks that their competition should get tariffs. It is a way to beseech both those in power for special pleading. That is the economic philosophy of this administration.” I totally agree with this.
I am by no means that well-read in the history of tariffs, but I have read about them, including throughout U.S. history in multiple books, including the massive tome by Clashing Over Commerce: A History of US Trade Policy (2017) by Douglas Irwin. I think it is fair to say that the history of tariffs are replete with industries cozying up with administrations to either get out of them, or to convince administrations to put higher tariffs on their competitors. And the use of protectionism, industrial policy, and so forth is complicated, economically, politically, and historically. There can be national security reasons to encourage reshoring; and developing industrial policy on critical medical supplies, or AI, or climate change are things to truly consider.
This letter is about Trump’s motivation for tariffs.
Trump is putting on tariffs using authority given to the presidency by Congress in the International Emergency Economic Powers Act (IEEPA) of 1977. According to MAGA, since Trump declared a border emergency, he can use IEEPA to institute tariffs. Though the reality of the IEEPA is more nuanced than that. In fact, until Trump, it has never been used to levy tariffs; it’s typically used to levy sanctions. But I digress again.
Trump loves tariffs for two big reasons.
Tariffs Allow for Corruption
Trump loves tariffs because it forces people to try to beg, plead, and to show him personal loyalty in order to get out of tariffs. Oh, so what that you have been our trading partners for decades? You want out of tariffs, you better give me, X, Y, or Z. Trump loves the perceived power tariffs gives him, without thinking enough about retaliation, import substitution, and the very real chance that tariffs can reduce the total number of both imports and exports. In other ways, will hurt the economy; not help in any way. Trump loves that tariffs threats gives him leverage to pull concessions from groups, interests, and industries. What he fails to recognize is that tit-for-tat tariff ratcheting with allies is a really bad idea.
The glocal economic order leaves much to be desired. I’ve written about this before and I totally agree with Mariana Mazzucato that we need a new global economic system, oriented towards public value creation where our planet collectively tackles climate change, social welfare, inequality, and so forth. We need deep restructuring but what Trump is proposing and doing is the exact opposite of what we need.
On to the second reason Trump loves tariffs.
“Deficits” Sound Bad
Another reason Trump said that tariffs are his favorite worid is that Trump has an unlearned idea of “deficits” and “surpluses.” I believe that Trump learned that we have a “trade deficit” and he believes that all deficits are bad. But all that a trade deficit means is that you import more than you export. It’s a simple balance of payments, double-entry accounting-type number. Regardless, the trillions of transactions are mostly done by millions of individual firms, and not between states. Plus, many imports, be they natural resources, intermediate goods, or capital equipment such as turbines, tractors, drilling rigs, lithography machines, printing machinery, and so on, are used by U.S. industry to make products that they then sell domestically and internationally. Imports help with exports. Imports help local business. Imports increase competition, which keeps prices down.
Economic metrics to consider: unemployment, GDP growth, sectorial makeup, public sector debt, private sector debt, individual debt, total amount of wealth inside a country - currently, none of this can really be impacted very much by tariffs. Sure, sectorial makeup could eventually be impacted by tariffs, but short term, the place where you import will change, but there is no evidence that the total amount will change.
The U.S. has a robust export economy, including 19% of it’s economy still being composed of industry. But only 25% of U.S. GDP is tied to international trade; far below the global average of 59% (World Bank data). It is primarily a service economy. Five out the ten largest service sector economies in the world are France, the U.S., the U.K., Italy, and Japan - all five of these countries are in the top 10 richest countries in the world. The five countries that have the highest industrial sectors: Saudia Arabia, UAE, Indonesia, Iran, and China. You want a very broad mix of sectors that you capture value in, and the U.S. has one of the most diverse mix of sectors in the world.
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Trade balance is basically a microeconomic indicator masquerading as a macroeconomic indicator. Ok, that’s not true but what I mean is looking at bilateral or even just general trade balance numbers don’t really tell you anything about the performance of an economy. It’s closer to meaningless than meaningful.
Trump loves tariffs for characterological reasons. He wants to be a mobb boss, a political machine head, a bully. He wants to turn our liberal Constitutional republic into a personalist regime. And 8 billion people are collateral damage in his world.
These days everyone listens with their eyes,
Patrick M. Foran