Critics of Trump’s Reciprocal Tariffs are Missing the Economics Gene

Critics of Trump are hysterical over his promise of reciprocal tariffs, and fundamentally disagree with his positions on the economy. They blame Trump for the price of eggs, the Russia/Ukraine war, DOGE and Elon Musk, and decry cuts to the federal government and federal employees. Much of this criticism is Trump Derangement Syndrome, but a lot of it is because of a lack of understanding of basic economics.

What many Americans are not aware of is that tariffs funded the American economy prior to the income tax, which meant that Americans did not have money taken from their paychecks – they kept everything they earned until they decided to spend it.

Heritage Foundation Economist E.J. Antoni said:

“the idea that tariffs are always and everywhere passed on to consumers is a fallacy, by both economic theory and the record of history. Factors such as changes in exchange rates mean that foreign producers typically end up paying some (or most) of a tariff.

But today, both our friends and foes alike abuse America in international trade and undermine her potential to thrive. For example, Mexico has been working with China to circumvent tariffs and non-tariff barriers (NTBs) on China and abuse provisions of the trade deal between Mexico and Canada. That makes it impossible for American companies and American workers to compete.

Many European nations use schemes like value added taxes (VATs) to impose implicit tariffs on American exports. Furthermore, countries like Germany and Japan still have tariffs that were put in place after World War II to protect industries being rebuilt following the conflict. The status quo has completely changed, and there’s no reason for these nations to continue penalizing American farmers and factory workers.”

Tariffs work

The Case for Trump’s Tariffs, Combined with tax cuts and deregulation, President Trump’s reciprocal tariffs ensure that America’s economy booms again, says John Paulson in the Wall Street Journal. That’s how economics works.

“The proposal for tariffs has raised the typical concerns from economists who argue for free-trade policies. Their views reflect traditional economic orthodoxy, not reality. In the real world, we have a one-sided free-trade policy in which America isn’t nearly as protectionist as other countries,” John Paulson explained in the Wall Street Journal.

“The U.S. imposes only an average 2% tariff on imported industrial goods, while many other countries have both high tariffs and nontariff trade barriers. According to the Bureau of Economic Analysis, the merchandise trade deficit has exploded under President Biden, reaching a yearly record $1.2 trillion in 2022 and hitting a July record of $103 billion in 2024.”

This imbalance has been devastating for U.S. industry. Since the North American trade agreement (NAFTA) was passed by the Clinton Administration in 1993, millions of manufacturing jobs have been lost, a huge trade deficit emerged and American manufacturing wages declined.

Notably, the North American trade agreement originated at the World Economic Forum in Davos.

“The United States entered the World Trade Organization (WTO) in 1995, China joined the WTO in 2000, and the U.S. trade deficit with China soared thereafter, contributing to the manufacturing job loss,” Citizen.org reported.

“Since 2000, thousands of factories have closed, wages have stagnated, communities have deteriorated, and economic inequity has intensified. By contrast, foreign companies exporting products into the U.S. have prospered. Mr. Trump recognizes this, which is why as president he was tough on China and negotiated better trade deals,” Paulson said.

Batya Ungar-Sargon has a beautiful way of describing the Trump economy and tariffs:

“You know, the thing that your viewers have to understand is, we were all there in 2018, in 2019, when President Trump put 25% tariffs on Chinese imports of steel and aluminum, and every economist said a toaster is going to cost $300. And guess what? The price of steel and aluminum went up for three months and it came right back down because this is a glorious country full of free market competition within the United States. Donald Trump has done an amazing thing. He turned the GOP into the party of the working class, and working-class voters love tariffs because they make their labor more rewarding for them. They get the American working class higher wages, which they can then use in the marketplace to compete against elites and to actually achieve the American dream, President Trump is teaching a generation of Republicans and business leaders how to build an amazing economy that will lift all boats, that will lift working-class people, as well as the stock market, and that will give the GOP a ruling majority for years and years to come; an economy based on love of country that will make America into the powerhouse of manufacturing, the superpower that it used to be.”

Americans are paying higher prices for everything thanks to the Biden Administration printing money the last four years, dramatically increasing inflation – which hurts the poor, working class and middle class the most. Prices rose over 20% under Joe Biden’s administration, and groceries rose 22%.

Nickson says, “Kill the Administrative State, Salt The Earth Beneath It, Eliminate Income Tax, and the Middle and Working Classes Will Soar:”

“When Trump instituted tariffs on aluminum, the largest aluminum producer in the U.S. restarted idle production lines. These are good jobs, family supporting jobs. Jobs with multipliers across every community in the region.

At the same time, an aluminum plant in Quebec, which was selling subsidized aluminum into the American market, closed. Quebec was cheating. We cheat with our deals by subsidizing our industries. We cheat with softwood. We cheat with anything we can. As does Europe, as does India. It is the opposite of virtue. If Canada and Europe had not shut down their industries over ‘climate change’, they would not need to cheat to sell their product. They would be able to use it that aluminum for example and create jobs that would mean most of the democratic west would not be desperately broke.

Tariffs on American goods is how every other country makes up for its poor decisions as was made clear when the US Trade deficit surged to a record ahead of Trump’s decisions. They were getting in while the getting was good. The U.S. imposing reciprocal tariffs meant their gravy train was about to end.

Imposing tariffs on foreign goods means a $700 billion add to the U.S. budget. It ushers in an entirely virtuous cycle. It brings back badly needed manufacturing to the U.S. It means workers with good pay, jobs which have a multiplier of 3-5 throughout the economy. It means more demand for American resources; the average mining job has a multiplier of 7 jobs. These are not influencer jobs or McJobs or jobs in moving money around, they are real jobs where people can build families and a future. Cut a trillion off the bloated destructive evil of the administrative state through DOGE and firing 1/3 of federal and state workers, $700 billion in tariffs, and lo and behold you have a functioning economy. Your deficit has been eliminated. You are no longer Big Daddy for failures across the planet. Countries like Canada and all of the E.U. and Britain are forced to grow up and develop.”

Take the time to read her entire post. She’s thorough and a great researcher.

E.J. Antoni also has something to say about Canada:

“Consider Canada, whose leaders are ranting about Trump standing up for Americans. If Canada agrees to eliminate its own tariffs and NTBs, then American exporters, like dairy farmers, will be more competitive and will sell more product in Canada. That means doing more business and employing more Americans.

If Canada remains obstinate and insists on a trade war, then Canadian products will be less competitive, opening the door for American producers, like foresters, to expand production and sell more domestically while employing more Americans. Trump is positioning the American worker to come out on top either way.”

Watch as President Trump lowers marginal tax rates, unleashes the many types of abundant US energy, and cuts regulations – the cost of everything will decrease, while his tariffs will increase costs on overseas manufacturing. Jobs will be created and manufacturing will come back to the U.S., and those are high-paying jobs with benefits.

Antoni sums up: “Free trade should apply first and foremost to domestic trade because we should be focused on benefiting our own citizens before we worry about those overseas. We don’t hate foreigners—we just love Americans more.”