Tariffs, Inflation, and the Donkey that Cried Wolf

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Now Democrats scream about Trump's proposed tariffs causing inflation. Isn't that the most ironic thing?

President Trump has been re-elected, and the American left is losing its mind.  That was to be expected.

It’s one of the ways leftists are losing their minds that might be a bit surprising.  They warn that President Trump will increase tariffs.  “That’s a tax increase!” they declare.  “It’s inflationary!”

Now, it is true that President Trump has proposed an array of tariffs and related measures for his upcoming term, intended to address a few of the fundamental problems suffered by not only the United States, but also the rest of the developed world.

Over the past four decades, Red China has gradually taken over the manufacturing of a shocking percentage of the world’s products, from consumer items to commercial machinery, from small components to finished goods.  The first Trump administration did the research to prove — for the benefit of anyone who didn’t already realize it — that much of this Chinese takeover of the world’s factory work has been unfairly obtained at best, malevolently intentioned at worst.

So a strong case can be made — and again, the evidence of the first Trump administration is that it worked — that the negatives of such import tariffs (the increase in cost of the products imported and thus taxed) are more than made up for by the positives of creating new jobs, both here in the United States and in other countries.  The old saying first espoused by President John F. Kennedy fits here: a rising tide lifts all boats.

As punitive tariffs on Chinese goods are increased, either American businesses will grow or spring up to meet that demand, or manufacturers in other countries — other than China — will meet the demand, buying necessary materials, factory equipment, and related products and services from the USA or other Western nations. 

The entire world has suffered as Red China has turned the idea of an interdependent global economy on its head.  Far from the free-traders’ expected dream scenario of raw materials coming from some countries, components coming from others, and everything being processed and assembled by industrial machinery from still others, China has focused on doing everything itself.  The Chinese import as little as possible and export finished goods that depend on other nations for nothing but the customers and the technology that they learn, copy, or steal.

The Trump administration’s goal is to use tariffs — and, if necessary, other measures — to reduce China’s ability to suck all the oxygen out of the global economy as it has been doing for so long.  It’s a worthy goal and a legitimate method.

But yes, there is indeed the chance that it could be inflationary, especially in the meantime, while it’s ramping up, while it’s starting out, before the new domestic and non-Chinese foreign supply chains fully take China’s place.  For that period, yes, the products we still import from Red China will cost more because of the increased taxes.  We will be better able to absorb it, because at the same time, President Trump will be reducing other taxes, other costly regulatory burdens, and the cost of energy.  In the grand scheme of things, these savings may more than make up for the added cost of these import tariffs, so it’s an optimal time to do it.

But still, we must be honest.  The Democrats are, to an extent, correct that a tariff raises prices, because a tariff is a tax, and taxes are always — yes, always — ultimately paid by the end consumer.

But that leads to a different question.

Why is it that the Democrats object to the inflationary aspect of tariffs, and they never object to the inflationary effect of anything else they advocate?

Over the past four years, the Democrats have caused the costs of diesel fuel and gasoline to jump by fifty to a hundred percent.  That was inflationary.  Did the Democrats ever apologize for that?

Over the past four years, they also printed hundreds of billions of dollars in fiat money to give to illegal aliens, green energy companies, weapons systems for Ukraine, and big city bailouts through such pork-laden programs as the Inflation Reduction Act.  This was all inflationary, but it didn’t stop them.

They fought to close coal plants and spend mints building worthless wind turbines and solar panel farms, producing the least efficient and therefore most expensive energy possible for our overtaxed electric grid.  This increased cost of energy has driven up the cost of manufacturing, the cost of refrigeration, the cost of cooking — everything from foods and beverages to manufactured goods has gone up because of the Biden-Harris war on energy.  That’s inflationary.  But that didn’t stop the Democrats from advocating such policies, did it?

And what did the Harris-Walz campaign advocate for our future in their 2024 campaign?  If they had won, instead of the Trump-Vance ticket, then what policies would they be implementing?

They advocated the expiration of the Trump tax cuts, which would increase the corporate tax rate from 21% to at least 28%.  That’s inflationary.

They advocated the creation of an unrealized capital gains tax — the actual taxation of theoretical paper gains on investments that have not even been sold.  While never fully fleshed out, their advocacy of this half-baked concept was never dropped as their philosophy, and the fact that it would be inflationary never bothered them a whit.

Then there’s the almost religious nature of their support of ever-increasing minimum wage levels.  No matter how often it is empirically proven that minimum wage hikes cost the economy both jobs and promotions, by leaving less money for a business to either hire or promote staff, the Democrats continue to press for such increases.  Just look at your local fast food restaurant and the way its prices have doubled in the past four years, primarily because of the inflationary Democrat policies of increasing energy, transportation, and employment costs.  The Democrats haven’t apologized for the fact that they’ve performed the miracle of making fast food unaffordable, have they?

In the end, as the incoming Trump administration advocates a comprehensive package of thoughtful economic reforms that do include tariffs on imported goods, especially from China, we should be honest, and acknowledge that yes, the tariffs, if taken alone, in a vacuum, would be inflationary.

But we must ask: why don’t the Democrats care if everything they do is inflationary?  Why aren’t they concerned about the fact that their own policies, from energy to employment, from tax policy to the money supply, have been the most inflationary that anyone has seen in the United States in over 45 years?

One is tempted to remind them of the biblical injunction to cast out the beam from their own eye before complaining about the mote in their neighbor’s, but the odds are that they are no more familiar with the Bible than they are with any economics textbook.

When we look at the big picture, it’s clear that the Trump administration’s tariff policy will indeed be just part of a comprehensive, economically restorative program.  And it’s just as clear that the left is hypocritically objecting to things it doesn’t begin to understand.

John F. Di Leo is a Chicagoland-based international transportation manager, trade compliance trainer, and speaker.  Read his book on the surprisingly numerous varieties of vote fraud (The Tales of Little Pavel), his political satires on the Biden-Harris years (Evening Soup with Basement Joe, Volumes I, II, and III), and his nonfiction book on the 2024 election, Current Events and the Issues of Our Age, all available in eBook or paperback, only on Amazon.

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Image: pasja1000 via Pixabay, Pixabay License.