And just like the communists, they will always speak of doing it on behalf of the people. Welcome to the Peoples Republic of America (PRA), because it’s Tariff Time! Of course Mr. Trump’s supporters will vehemently disagree with me, with some justification, as Mr. Trump doesn’t want to run the whole economy. True enough. But this is a difference of degree, not kind. This simply means Mr. Trump won’t ruin the country, but he will make it poorer than it otherwise would be*, with more corruption than we would otherwise have.

Today the tariffs are in effect with Canada and Mexico, and Canada has reciprocated (with Mexico doing the same this weekend), as countries always do. Mr. Trump, who earlier said that his tariffs were all positive, now acknowledges that there will be pain, but it will be worth it in the long run. As good Bereans know, tariffs don’t increase or decrease jobs; they simply change the composition from jobs that are favored by the market to jobs that are favored by the politician. The problem, of course, is that the market favors jobs where our country has a comparative advantage and pay higher wages, whereas the jobs favored by the politicians are those that we do not have a comparative advantage in, and pay relatively lower wages. Does anybody really want the textile factories that used to dot the South back in my childhood? Mr. Trump seems to have a special affection for the auto industry, and that’s the industry that will be hurt the most, since we have parts of cars going back and forth across the US border north and south, sometimes several times. “Just make it America” and it will be no problem, say the Trumpians. Aside from the fact that it will raise costs (I’ve seen estimates of $10k increase for SUVs), it is physically impossible to go from a global integrated production system to an autarkic process where we make everything at home, in any short time. You’re talking several years if not decades to realign production. Even his fantasies cannot come to pass within his administration. Oh, and speaking of homes, get ready for the new sticker shock, as Trump’s attacks on Canadian timber and global copper will lead to higher home prices. Elected to bring down prices? Maybe not. Let me illustrate the incoherence of Mr. Trump’s statements on tariffs. He has claimed they will raise a ton of revenue, and that it will be paid for by the foreigners since we’re such a great market, and it will also bring back jobs to the US. These claims cannot be simultaneously true. If the tariff’s raise any revenue, either the US consumer paid more, or the firm took less. If the consumer paid more, then Mr. Trump’s claims that China (or Mexico or Canada) will pay for the tariff are wrong. If the firm eats the tariff, then they are no longer making a normal rate of profit and will ultimately leave this market. Data confirm that any tax increase (tariff or otherwise) is always split between the consumer and the producer in the short run, but in the long run the consumer always pays the tax. If the firms do take lower prices, there is then no incentive for manufacturing to emerge in the US (without a higher price), so there are no new manufacturing jobs. So you can’t have more domestic jobs, more tax revenue and the same price for the consumer. You can as confidently assert this as Joe Biden’s stubborn insistence that his spending would not lead to inflation, but Adam Smith (and David Ricardo) will have his day. Pride goeth before the fall. Speaking of falls, how are you feeling about the stock market these days? Or 1st Qtr GDP?

Edit Update: Former Clinton Treasury Secretary Larry Summers has an excellent takedown of the harmful nature of Mr. Trump’s tariffs over at The Free Press–all pain with no gain. Before you suggest that we can’t listen to him because he’s a Democrat, remember he had the intellectual integrity (almost alone among Democrats) to tell Joe Biden you’re about to inflict an inflationary mess on us with his spending, and not to do it. But alas, Joe Biden insisted that “no economist” says there is going to be inflation.

* I am still quite optimistic about much of his deregulatory agenda, and that may indeed offset much of the damage that his tariffs will cause. But poorer than we would have been otherwise, we will be.