Trump’s tariffs and the lies Democrats tell about them
As an economic conservative, I am opposed to tariffs. In my perfect world, we would have none. But we do not live in a perfect world.
As he promised over and over during his campaign, President Trump intended to use tariffs as a negotiating tool. He did not take a piecemeal approach. He started hitting allies and adversaries across the board with tariffs. In some cases, extraordinarily high tariffs.
Trump’s tariff policy was never about economic isolationism. It was about negotiating from strength. By imposing tariffs on allies and adversaries alike, Trump signaled that the United States would no longer tolerate lopsided trade relationships. His approach was comprehensive, targeting not just low-level infractions but systemic abuses—such as export subsidies, intellectual property theft, and market access restrictions.
Trump’s Objectives
As outlined in his strategy, Trump had three primary goals in terms of tariffs:
- Reduce high foreign tariffs that unfairly penalize U.S. exports.
- Eliminate unfair trade practices, including subsidized exports, bans on imports, eliminating counterfeit goods and address intellectual property theft.
- Secure non-trade concessions — using tariffs to end wars, increase NATO contributions and gain greater geopolitical cooperation.
This multi-pronged approach can be chaotic, but it is starting to yield positive results – without all the downsides predicted by political adversaries. Vietnam has agreed to a 20% tariff rate—far lower than the 46% Trump initially threatened. The European Union has signaled willingness to accept a 10 % universal tariff on many exports. These are not signs of economic breakdown—they’re signs of leverage working.
The Myth of One-to-One Price Hikes
Far from the simplistic narrative that tariffs automatically raise consumer prices or fuel inflation, the reality is more nuanced—and Trump’s predictions have been increasingly supported by recent data and economic behavior. The assumption that tariffs automatically trigger massive price increases and inflation ignores how real-world supply chains and pricing strategies work. Tariffs do not automatically translate into one-for-one price increases. Instead, businesses, distributors, and even foreign exporters often absorb all or much of the cost to remain competitive.
Recent analysis from the Council of Economic Advisers found that the price of imported goods has actually declined since the latest round of tariffs took effect. Ponder that. Against all the draconian predictions, the retail cost of imported goods has dropped.
And there is more. The imported component of the Personal Consumption Expenditures (PCE) index dropped by 0.1% from December through May, while overall goods prices rose only 0.4%—a modest 1% annualized rate.
This trend is echoed in the Consumer Price Index (CPI), where imported goods fell 0.8% while overall prices remained flat. These figures directly contradict the narrative that tariffs are driving inflation and driving up prices in general. Trump’s political adversaries have been wrong about inflation and wrong about price increases – at least so far.
How and Why Businesses Absorb Tariff Costs
So how are prices staying stable despite higher import taxes? The answer lies in business ingenuity and market discipline:
- Front-loading inventory: Many companies pre-ordered goods before tariffs took effect, allowing them to sell at pre-tariff prices for months.
- Delaying purchases. Conversely, some companies will defer purchases when imposed tariffs are at the highest – anticipating a future reduction.
- Bonded warehouses and trade zones: Importers delay tariff payments by storing goods in special zones until they enter the market.
- Foreign exporters absorbing costs: To maintain market share, some overseas producers lower their prices to offset tariffs in order to stay competitive.
- Retailers holding prices steady: In a competitive market, many businesses choose to absorb costs rather than risk losing customers.
These strategies have created a buffer against inflation, allowing consumers to continue purchasing goods without dramatic price hikes.
Why would exporters absorb the additional cost of the tariffs? Simple. Because they want to compete in the American market. The size of the American market is what gives Trump considerable leverage in negotiations. Currently, China exports $525.65 billion in goods to the United States. The Chinese economy cannot afford to lose even a portion of the American market without suffering severe economic consequences.
Among the consequences could be the weakening of the Chinese yuan, lower industrial output, factory closings and high unemployment. There would be a massive drop in foreign exchange earnings – especially in such key sectors as electronics, machinery, furniture and apparel. Industries with thin profit margins – such and toys and textiles – would be the hardest hit.
Gas and Energy: A Case Study in Price Stability
One of the most telling examples is gasoline off-price stability. According to ABC News, oil prices have dropped nearly 15% since Trump took office, helping to cool inflation across multiple sectors. This decline in energy prices has a ripple effect. Lower transportation costs mean lower prices for groceries, consumer goods, and services. It’s a powerful counterbalance to any upward pressure from tariffs.
Inflation Trends Under Trump
Since Trump’s return to office, inflation has consistently declined, defying predictions of economic turmoil. The May CPI rose at an annual rate of just 2.4%, cooler than economists expected. The PCE index rose 2.3%, only slightly above the Federal Reserve’s 2% target. Even high-profile categories like eggs, which saw a 53% price surge in January, have cooled to 41% by May. These figures suggest that inflation is not only under control—it’s trending downward.
Tariffs: A Rebalancing Act
One of the benefits of tariffs can be the revitalization of the economy by expanding sale of domestic products, job creation and lower unemployment. This possible outcome is influenced by what proportion of the tariffs reach the retail shelves. Since tariffs are being negotiated on almost a daily basis, we cannot yet determine their full impact.
To whatever measure the tariffs make goods more expensive, there is a benefit for domestic production. While Trump’s tariff costs have not yet reached the consumers – and maybe never will – the threat of tariffs appears to have produced some positive investments in American industrial growth. The monthly jobs numbers have been exceeding expectations – and the unemployment rate has dropped to 4.1%.
The tariffs have not had a negative impact on the stock market, as many Trump critics have predicted. In fact, it has risen to record highs – fluctuating occasionally based on day-ti-day events. But the trend is upward.
A Yale University analysis projects that Trump’s tariffs will boost U.S. manufacturing by 2%. While some sectors like agriculture may face short-term challenges, the long-term benefits of a more balanced trade environment are substantial.
President Trump’s tariff policy is not a reckless gamble—it’s a calculated strategy to restore fairness, protect American workers, and rebalance global trade. The evidence is mounting that tariffs have not caused runaway inflation, and in many cases, prices have remained flat or even declined.
By absorbing costs, adjusting supply chains, and negotiating better deals, businesses and foreign partners have adapted. Consumers have not been crushed under the weight of tariffs. Instead, they’ve benefited from a stronger domestic economy, more jobs and more equitable trade relationships.
Critics of Trump’s tariffs are engaging in political misinformation, disinformation and downright lies. MSNBC’s Lawrence O’Donnell is among the worst of the worst. In his inimitable pompous and arrogant style, he declares the consumer will pay all the tariff costs. “That is how it works,” he declares. Not so. O’Donnell is an example of the merging of arrogance, ignorance and political deceit. And he is not alone,
Many are calling tariff increases a “national sales tax” as if 100 percent of the tariffs will be passed on to the consumer. It is a grossly false and misleading assumption. Among those proffering that nonsense are Senate Minority Leader Chuck Schumer, Maryland Senator Chris Van Hollen, Maryland Congressman Jamie Raskin and most of the hosts on MSNBC.
Trump’s approach may be unconventional – and a bit chaotic in the short run — but it’s proving effective. Tariffs, when used wisely, are not a tax on the American people—they’re a tool for economic sovereignty. We do not know what the various tariff deals will look like — or what impact they will have on the economy – but so far, the Trump administration has been right and his political adversaries have been wrong – very wrong. So, there ‘tis.
I often find the longer the rationale, the more tenuous the premise. This is a very long piece. Myself, conservatives have taught me to go long with all their pesky questions and allegations. So, I try to “cut them off at the past” and go long all the time, sorry. Also, many wonder why I am on a conservative site. First reason is because Joe lets me. The more important reason is that I like dealing with the issues of the day, researching them, and writing down my views, for myself. I would love some legitimate push back on the issues, my presented facts, and conclusions but have learned to live with the vitriolic personal attacks as well. Just not as exciting as a good debate though. Too bad. Sigh.
Just dealing with the pricing model, I find the author somewhat hypocritical in his statements that price does not follow costs in a direct line, dollar for dollar given previous opposite statements about minimum wage increases. In this case, the cost is tariffs. I agree with the author and had told him the same about raising the minimum wage some time ago. Then, he vehemently refused that argument which he now so embraces. He even called me liar and many other last names. Bad ones. He was mean. Now he wholeheartedly embraces my theory and gives zero credit. Wonder if he still feels each dollar of minimum wage will be compensated for by a dollar in price increase? Bet that rationale would be long….
While I agree that price, especially legacy product price, is not directly affected by cost increases; as I said with minimum wage, it will be affected over time to some extent out to the full value of the cost, and perhaps even beyond. Additionally, food products are more likely to feel the added cost pain sooner. At least that’s how it normally works.
I could not find the tariff goals stated by the author as coming from Trump. They do not match the White House Goals.
The author does not source but says Trump is doing tariffs because:
1. “Reduce high foreign tariffs that unfairly penalize U.S. exports.
2. Eliminate unfair trade practices, including subsidized exports, bans on imports, eliminating counterfeit goods and address intellectual property theft.
3. Secure non-trade concessions — using tariffs to end wars, increase NATO contributions and gain greater geopolitical cooperation.”
Trump, aka, The White House ACTUALLY says: *https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security/* This is very different from what the author states the President states; it’s quite a bit expanded, at minimum.
And buried in there might be the real top two reasons Donald J. Trump wants tariffs. One: because he can do them without anyone in his way, and two: as Trump mouthpieces say: “These tariffs are central to President Trump’s plan to reverse the economic damage left by President Biden and put America on a path to a new golden age.” That’s code words for “The Gilded Age” which is code words for McKinley and the 1890’s. He has often waxed poetic about the excesses of The Gilded Age which he conveniently forgets that this expansion was fueled by massive immigration like half of my family. Mark my words: Project 2025 may be the plan but Trump’s dream is a new American Gilded Age. Appropriate since The Gilded Age produced our robber barons, great wealth discrepancies between the classes, boom n bust economy without any Federal protections or controls, and many other things totally Trump today.
And neither the author’s supposed goals, nor the White House stated goals, cover a few of the more whacky goals Trump has stated like:
– To curtail illegal drugs like Fentanyl coming across the border.
– To get Brazil to end the legal prosecution of Trump’s buddy: Jair Bolsonaro
– To reduce the deficit and balance the budget (see previous comments re: usage tax)
– To open markets and establish free trade
– Trump has suggested tariffs could generate revenue to offset the cost of child care, thereby allowing more women to enter the workforce. (say wha?)
– In Congress, Trump connected tariffs to protecting “the soul of our country,” associating the policy with patriotism and national well-being. I hear inflation is the soul protector’s kid sister…..
Based on the “plan,” the author sees: “his multi-pronged approach can be chaotic, but it is starting to yield positive results – without all the downsides predicted by political adversaries. Vietnam has agreed to a 20% tariff rate—far lower than the 46% Trump initially threatened. The author applauds that? The European Union has signaled willingness to accept a 10% universal tariff on many exports. These are not signs of economic breakdown—they’re signs of leverage working.” Only a rube economist would applaud economic chaos like these artificial market tax mandates. He states success as a 20% tariff in Vietnam —– yeah baby, raise those prices, the author like it Mikey. And the pinnacle of suck-cess is the author telling you, “Hey, it coulda been worse.” Yeah, and only buy one doll for your kid this year too. And the now traditional 10% for the EU —- that’s as low as she goes boys, 10%, extra in cost that the author can only say: “please King George, can I have some more taxation without representation? And please tariff to stop the fentanyl too. And to get Bonasera off the Brazilian legal hook. Why not tariff Putin to get Snowden back? I do not see tariffs, or lower tariffs, as the “positive results” that the author does. Wonder if he thinks raising the minimum wage is now a positive result. Guess we will find out now that 22 States have done it. Red ones too. Oh, yeah, way back when, the British did indeed charge a tax on tea, but it was not a new tax and the price of tea was actually dropping as they dropped it over the side in protest of taxation without representation. The tax was about 20%, always had been, same price as Trump’s Vietnam product tariff tax.
Speaking of goals, remember 90 deals in 90 days? That clock ended July 9th. Trump said he would make potentially dozens of tariff deals before July 9. As of 7/12, only two deals — with the UK and Vietnam. Next, Trump tried to rebrand his new letters as tariff deals. They are not. The clock on the letter is 8/1. To date, trade deal wise, tariffs seem to be a total bust.
The author sees this as progress. I do not. Plus, the chaos causes chaos as suppliers and distributors attempt to mitigate the chaos. Things are not being shipped, things are stacking up in duty-free warehouses, pre-purchasing to beat the tariff clocks artificially create purchasing bubbles, all sorts of chaotic effects. The biggest one is a freeze on economic activity waiting for the chaos to end. Hiring, plant expansion, investing, much is slowing down or being diverted.
FYI: Truth be told this story cannot be told until the end of the month when the GDP stats for Q2 come in. It may not be bad, but it will not be good, IMHO. But given we will have better data in less than a week, conclusions may be premature at this time.
While tariffs are represented by product as cost, they are also represented to the government as revenue and to the consumer as a tax. Trump is mandating a Trump-charge for the right to transfer the product from there to here. That’s a Trump addition to the cost of product. Trump alone. The importer physically pays the added cost and exporters, importers, and consumers can decide what to do with the added product cost based on competition, their market, their financial standing, inventories, alternatives, etc. The US ledger sees a tariff as revenue it deposits in the General Fund. That’s the exact same place your income tax revenues go. That’s right, it’s a tax too. Here’s another dirty little secret that the author won’t tell you. Trump has been signaling loud and clear that the base tariff is 10%, forever. Foreign products will have a 10% tax cost adder applied forever. Importers will pay it. It will go to the US General Fund. Forever.
Basically, Trump is signaling that he is going to shift income tax plus to be replaced by a tariff tax or sales tax. The tariffs are taxes levied by one man without our elected representation in Congress authorizing. Perhaps the tariff tax will even blunt the huge deficit he is running up with his over-the-top expensive deportations. It is taxation without representation, plain and simple. You can find Trump saying 10% is the floor, all the time. IMO, he is softening everyone up for his end goal: a usage-based taxation model perhaps with some income tax on the side. And once again for Trump policies, this policy will advantage the rich, who have lots of income, and disadvantage the poor who spend a larger income percentage than the rich just to survive and therefore suffer a greater percentage of income for a sales tax, or tariff. Didn’t see that in the goals eh Larry, but it’s all over Trump’s talk-track including his fake love for all things McKinley. I think he may even have known McKinley.
There’s over $100B in tariffs as of 7/13. You may not have paid a higher price, but someone did and Trump put it in the same place as your Income Taxes. If you didn’t pay it, then Walmart or its suppliers did. That cannot last for long. Sooner or later, there will be some price increases. Just not one for one. When we look at imports, Walmart is number one. Up there is also Target, Home Depot, Dole, Ashley Furniture, Lowes, LG, IKEA, you get the drill. All of these companies have announced price increases. Except Home Depot who says they only get 10% of anything from one place. I think that’s a marketing lie and future dream, but they did say it. Others have pledged holding prices until August, a fact that probably points to existing inventories.
The author misses that everyone is saying they are taking price actions on some products. The author misses that these are the companies that Trump has chosen to be the losers in this. He has put his own hand on our economic scales of a free market. It IS taxation without representation, pure and simple, by our Felon King. Tis time for a tea party.
The author also misses that the supply chain is broken as some have decided to “wait out” the chaos. I can’t get my new Ninya 5in1 Grill; they stopped shipping for a bit. Many other products are taking a shipping hiatus hoping to wait out the chaos. My new split was the last of its line: the pre-tariff inventory. I got a deal. Yours will be more expensive.
There are duty-free warehouses where goods are parked, pre-tariff, waiting to ship. They are full of products waiting for a tariff cloud to disappear. There’s over 2,200 of these packed to the gills.
Prices are going up, inventory is weird, people trying all sorts of avoidance techniques. Trying to buy before the end is even driving up sales this quarter. Just wait till next quarter on that to balance out.
Inflation also tweaked up; it’s a tiny amount, one month does not a data trend make, but a troubling sign.
Same with unemployment, it’s a tiny amount, but clearly there are more unemployed under Trump in year one than in Biden’s years three and four. Just a bit, but troubling.
However, at the end of the month we get a true up, I think, on gdp q1 2025 and the first view of gdp q2 2025. Trump’s q1 gdp growth was recessionary, negative that is, and the first true up made it worse. It is expected that q2 will be ho-hum —- at best. We will also compute gdp/debt ratio where Trump may make out given the $100B in tariff taxes holding in the General Fund to offset the massive spending for deportation of misdemeanor boarder jumpers where, instead of a $250 fine, we spend $15K. That’s $15M in cost for every 1,000 deportees of which Trump plans to deport 14,000,000 for a total cost of $210 billion dollars. Think what that will do to our bottom line……