Trump's Tariffs vs Free Markets

President Trump unilaterally declares the largest tax hike in almost 60 years with his so-called “Liberation Day” tariffs. These tariffs could significantly harm the economy and lead to a recession that the Democrats will use to seize back power for themselves. Why is Trump risking everything he’s fought for with these taxes? What’s the reasoning behind his actions? Will the tariffs be permanent, or are they negotiating tools? And will they protect American jobs, or destroy the economy?

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Transcript

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Today on The Conservative Rebel, President Trump unilaterally declares the largest tax hike in almost 60 years with his so-called Liberation Day tariffs. These tariffs could significantly harm the economy and lead to a recession that the Democrats will use to seize back power for themselves. Why is Trump risking everything he's fought for with these taxes? What's the reasoning behind his actions? Will the tariffs be permanent or are they negotiating tools? And do tariffs actually help America or harm it? We'll talk about all of it today on The Conservative Rebel. Anyone who's listened to this podcast in the past knows that I hate to be a contrarian or a party pooper. I hate to be the bearer of bad news or the storm cloud raining on people's parade. I'm lying, of course. I actually love doing all of those things. They are literally the reason this podcast exists. So today I am going to rain on the tariff parade. As you know, last Wednesday, President Trump declared that it was Liberation Day in the United States. Why? In what way were we liberated? Oh, we were liberated by the single largest tax increase since 1968. We will experience the liberation of higher prices, more taxes, and more government involvement in our lives. That's the type of liberation that America is going to get. I'm talking, of course, about the tariffs that Trump unconstitutionally declared without the approval of Congress, which is supposed to have the sole power to raise taxes on April 2nd. Trump decreed that every single nation on the face of the Earth would face a tariff of at least 10%, even if they have a trade surplus with the United States, even if they have zero tariffs on the United States. And the tariffs were vastly higher than 10% on dozens of different nations that have a so-called trade deficit with us. And there's been a lot of speculation since then about what precisely Trump's intentions are with these tariffs. Some people have been saying, hopefully, that it's 4D chess. They've been saying that Trump is going to use these tariffs as a negotiating tool to work with other countries to reduce tariffs and create more free trade. That's certainly the outcome I hope for. Elon Musk came out recently and said that he's hoping to see the US and Europe eliminate tariffs entirely with each other and have free trade between the two continents. That's what Elon Musk hopes will come out of this situation. If that was the case, then these tariffs would not really be anything to be concerned about. But I think that unfortunately, Musk has a minority view within Trump's inner circle. Increasingly, it's looking like the Trump administration actually thinks these tariffs are a good thing for their own sake. It's looking like the Trump administration more or less believes in the long-disproven theory that protectionist tariffs create jobs and help economic growth. They believe in the long-disproven theory that a nation can tax itself into prosperity. Here, for example, is what Trump's commerce secretary, Howard Lutnick, had to say about it.

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Is the president considering postponing implementation to negotiate?

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There is no postponing. They are definitely going to stay in place for days and weeks. That is sort of obvious. The president needs to reset global trade. Everybody has a trade surplus, and we have a trade deficit. We are paying away our future and our lives. The countries of the world are ripping us off, and it's got to end. The president has made it crystal, crystal clear. This is the policy we are going to protect. The factories that come build in America, we are going to protect them. They're going to be successful. That's why they're going to build in America the greatest economy in the earth. Our economy is the consumer of the world. We are the only one with a trade deficit. The rest of the world has a trade surplus. Why does Europe have a trade surplus? Is there something about Europe that's special? Seriously, are they a different world than we are? Why are they selling$200 billion a year more to us? It's because it's not fair. The rules Unfortunately,

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according to Commerce Secretary Lutnick, the goal of the tariffs isn't to negotiate free trade with other countries. Instead, it's to protect American industry and American jobs, and to reset the balance of global trade. Now all of those sound like very good things. Who would be against protecting American jobs? Who would be against protecting American manufacturing? And this is the reason why so many on the right are blindly celebrating these tariffs as a great move by Trump, and they will not question them. They just won't. Trump has nice-sounding reasons for wanting to do it. But newsflash. Politicians always, without exception, have nice sounding reasons for everything they want to do. The question is, will their policies actually do the thing we're told they're supposed to do? Will tariffs actually benefit the United States? The answer is absolutely not. But before we can understand why, the first thing we need to do is clear these muddy waters and debunk some of the common misconceptions about international trade that protectionists will seize on to make their arguments for tariffs. Now, when Howard Lutnick says America has been ripped off by trading with foreign countries, he's using what the great free market economist Thomas Sowell called the zero-sum fallacy in his book Economic Facts and Fallacies. The zero-sum fallacy is the mistaken belief that when two people or two nations freely and voluntarily trade with one another, one of them is a winner and the other is a loser. One of them is ripping the other off, and the other is being ripped off. In reality, every time people freely and voluntarily trade with each other, or entire nations freely and voluntarily trade with each other, both of them are benefiting. Otherwise, they wouldn't be trading at all. For example, when you go get a coffee from your favorite espresso stand, you're giving the espresso stand money in exchange for a coffee, and the espresso stand is giving you a coffee in exchange for the money. Why is this happening? Because you wanted the coffee more than you wanted the money you gave the people at the espresso stand. And the people at the espresso stand wanted the money you gave them more than the coffee they gave you. Both you and the espresso stand gave up a thing you wanted less in exchange for a thing you wanted more. Both of you left the transaction a little better off than before you made the transaction. You might wish the espresso stand didn't charge so much for the coffee, but you still decided that you wanted the coffee more than you wanted the money. That was your choice. There weren't any winners, there weren't any losers. Both of you benefited. If you didn't benefit from it, you wouldn't have made the trade at all. This is how the free market has lifted countless people from complete poverty to a high standard of living. When transactions are made freely and voluntarily, and the government doesn't use the violence and coercion of taxes and regulations to interfere with the process, it's inevitable that everyone will benefit. The same principle applies to international trade. When two nations are freely and voluntarily trading with each other, both of them will benefit, inevitably. Neither nation is ripping the other one off, or killing its jobs, or killing its manufacturing. If that was happening, they wouldn't be trading with each other in the first place. Instead, what's happening? Both of them are benefiting. Both of them are giving up things they want less for things they want more. There isn't a loser. Instead, both countries are winners. Sounds remarkably simple. Sounds remarkably obvious. That's because it is. It's really insane that some people just do not get this. Now, protectionists will respond to this. And when I say protectionist, I mean people who want tariffs. They'll respond and they'll claim that while this might make sense in theory, obviously it's not working because America has a trade deficit with other countries. They snatch up their statistics about trade deficits and proudly wave them in our faces like they're somehow proof that we're wrong and America is in fact getting ripped off by free trade. And a lot of people seem to think that that trade deficit argument is somehow conclusive. No one seems to ask the protectionists the obvious question. So what? so what we have a trade deficit returning to the espresso stand analogy you have a trade deficit with your local espresso stand you buy coffee from them and chances are very good the people working there will never ever buy anything from you Does that mean that they're somehow ripping you off by selling you coffee when they don't plan to buy things from you in return? Does it mean they're evil stammers and con artists who are nefariously stealing your money and making you poorer? No, of course it doesn't. The idea is ridiculous. Again, both you and the espresso stand are giving up what you want less for what you want more. Both you and the espresso stand are benefiting each and every time you freely choose to trade with each other. This is how your relationship with almost every business you have ever bought anything from in your life works. Every last one of those businesses, maybe there's one or two rare exceptions, have never bought anything from you ever. You've probably bought tens of thousands of dollars worth of things over the course of your life from Amazon. And Amazon, I'm willing to bet, has never ever bought anything from you. By the very logic that these protectionists are using to justify tariffs, you must have been scammed out of tens of thousands of dollars by Amazon. In reality, you freely choose to keep buying things from Amazon because you see a benefit in it. You see a benefit in getting what you order delivered to your door within 48 hours of clicking the buy button so you keep buying stuff from Amazon. Time and time again, you keep doing it, even though Jeff Bezos has never showed up to your door and bought anything from you. And just so we're clear, I don't like Amazon. It's woke, but I don't claim that it's scamming people out of their money. It's giving them precisely what they asked for. Same exact thing when other countries trade with each other. When there's free trade between two countries, both of them will inevitably become richer and more prosperous because of it. Now that we understand why free trade is undeniably a good thing, we need to get into the incredible damage that these tariffs can cause to our country. First of all, tariffs raise prices, and they can raise prices dramatically. No one denies that. Not even the protectionists. In fact, that's precisely what the tariffs are meant to do. The tariffs are meant to make imported goods far more expensive than they are, so consumers are forced to buy American goods instead. That is literally the entire point of these tariffs. When Howard Lutnick or Donald Trump say these tariffs are going to protect American manufacturing, they're really saying that they will make everything produced in foreign factories far more expensive so you're forced to buy things made in America. When they say these tariffs are going to protect American jobs, what they're really saying is that the tariffs will make everything produced with foreign labor so much more expensive that people will be forced to buy things made by American workers. And it's undeniable that some companies and some workers and some industries will benefit greatly from these tariffs. You're not going to hear me deny that. But what's also undeniable is that these companies, these workers, and these industries will only be benefiting at the expense of everyone else. Always remember that government is a parasitic institution. it's necessary but it is parasitic fundamentally it's not like a plant where it makes its own food from the sun with photosynthesis it's like a fungus growing on a tree sucking the life out of the tree so that it can survive Government can't create any job without destroying a job. The government can't help a part of the economy without hurting another part of the economy. It can't create money without destroying the value of money. It can't give anyone anything it didn't first take from someone else, to paraphrase Henry Haslip. A lot of people on the right who recognize this as a general principle seem to think it somehow doesn't apply with tariffs. They think tariffs are a way for the government to create wealth out of nothing, to create jobs out of nothing, to speak prosperity into existence. In his book, Economics in One Lesson, the economist Henry Hazlitt used the example of a tariff on British sweaters to illustrate why this is false. A British company can afford to sell sweaters it imports into the United States at$5 cheaper than an American company can afford to sell them, in his analogy. Because the British sweater is cheaper, more people are buying it than are buying the American sweater. So the government implements a tariff of$5 on the British sweaters, so they'll be the same price as the American sweaters. Now everyone is buying the American sweaters instead, because they're the same price or they're even cheaper, which is allowing the American sweater company to hire new people and create new jobs in the USA. On the surface, it looks like the tariff created good-paying American jobs— Everyone feels good and patriotic. But in reality, because all the Americans who bought sweaters had to pay$5 more than they would have without the tariff, all of them have$5 less to spend on all kinds of other things throughout the economy. Those businesses and those industries run in America by Americans will now have less money to use to expand their businesses, to hire new people, or even to For every job created in the American sweater industry, a job will be lost in another industry. This is how tariffs always work. They can have wonderful effects on certain businesses and certain industries, but in the long run they cause far more harm than they do good. Now, I understand that this analogy does not fit this situation perfectly. President Trump is not levying tariffs on specific industries, he is just doing general tariffs on all countries everywhere. But it has the same effect, it will increase the price of foreign goods. And a lot of the advocates of these tariffs will say, well, you don't have to worry about the tariffs. You won't be affected by the tariffs as long as you buy American. But, yeah. Duh, obviously. No one's denying that. No one is denying that. What we are saying is that you are eliminating our choices. You are eliminating consumer choice. You are forcing people to buy things at more expensive prices. Yes, if we buy the more expensive thing, the more expensive thing won't be made more expensive because of the tariff. That's not our point. The point is that now... because of the tariff, we have to buy the more expensive thing because it's the same price or it's cheaper than the thing that would have been less expensive without the tariff. So the people who say that tariffs are a tax on American consumers are not technically right in the strictest sense of the word. American consumers will not have to pay any tax money to the government. They will, however, be forced to pay higher prices to buy the goods that they could have gotten cheaper because these international corporations are getting taxed. So tariffs are not as or as harmful or as tyrannical attacks as the income tax, for example, but they are still a tax. They are still harmful. So if Trump keeps these tariffs, like Howard Lutnick is seeming to imply he's going to do, but he doesn't cut the income tax significantly or abolish it, which I hope he does... then these will be very, very bad for the economy. This will be very, very bad for the middle class. This could cause a recession that could even be worse than what we had under Biden. I understand that we're still not completely out of that yet, but this is going to make everything worse. That's why the stock market has just been in complete panic since this happened. It's because they understand that tariffs Tariffs are very bad for the economy. You know, a historical example of this is the Smoot-Hawley Tariff. I don't know if I'm pronouncing that right. I sure hope I am. But it was passed in the 1930s after the stock market crash in 1929 to try to lift back up the American economy, to try to stop the Great Depression from getting as bad as it did. It had the opposite effect. President Hoover signed it into law. Lots of economists wrote him letters urging him, do not do this. This will make everything worse. He refused to listen because he was beholden to the same protectionist fallacies that Trump has apparently fallen into the trap of believing in. And what do you know? Everything got way, way worse. And that destroyed Herbert Hoover's administration. Since the Depression got so bad, everyone voted for socialist dictator Franklin D. Roosevelt, who replaced him. We have a similar story with Joe Biden. Of course, I don't think Trump is a socialist dictator, obviously. But I'm meaning it's the same kind of story in the sense that a very bad economy under one president led to the election of Donald Trump. So Donald Trump is literally risking everything he has thought for. The entire MAGA agenda. Everything he has done that has been very good. You know this. You know I've been supportive of most of what he's done. He's risking all of that on this stupid tariff thing. Because if the economy goes down, the Democrats are going to seize on this. It's going to be a murder. We are going to lose the house decisively. We are going to lose control of the government if the economy tanks, and there is a very real possibility that that could happen. So by doing this crazy tariff thing, Trump is handing the Democrats a talking point that isn't completely insane. All of their other talking points are completely deranged and insane. If it weren't for these tariffs, they'd have nothing remotely sane and sensible to run on in this election. they would have pretty much no hope in 2026 and in 2028 to run on anything that made any sense to normal, independent, functional voters. They'd cry about Elon Musk's evil plan to save taxpayers' money. They'd cry about all the wonderful members of our amazing LGBTQIA2SPDAA-plus community whose dreams of being Marines have been crushed by Trump. They'd cry about all the poor little doe-eyed MS-13 terrorists and murderers who had to go on the scary airplane to a scary, scary place run by mean, scary guards who aren't very nice to them. What else are they going to talk about but that? No one would care. No one would care about any of it. Especially if we have some dork like Tim Walls or Kamala Harris running. It would be a murder in our direction. We would crush them. But Trump is throwing these lunatics... a golden opportunity. He's throwing them a thing they can actually talk about, and they will be right on it. You're already seeing this happen. You're already seeing Hakeem Jeffries. Did he? I don't know if you saw the clip, he is practically giddy that he finally has this thing to talk about. Democrats everywhere are talking about how Liberation Day is the increase in prices day. It's already happening. We're already giving the Democrats their talking point. It's insane. There is some hope, though, fortunately. There are a lot of Republicans who are already, they understand this, they understand that if they associate with this madness, they are going to get killed in the next election. So people like Rand Paul and Ted Cruz and many others are already coming out against this tariff. They're saying that they would support it, like I would, like every sensible person would, only as a way to reduce tariffs, only as a way to secure free trade agreements with other countries. And we know we have Elon Musk, who is a voice of sanity in the White House on this issue. He's made his opinion known, as we already talked about. So there is some hope that Trump will see that the stock market is freaking out, he will see that this is going to solve nothing and make everything worse, and he will learn from this and he will take back these tariffs. Lots of countries, dozens of countries, have already contacted him, and they're trying to figure out what's going on and trying to avert a trade war so there is a very honorable way Trump can back out of this and save face. He can just... negotiate some free trade agreements, even if that wasn't the original plan with these countries, and he can minimize the political damage, he can do some damage control, and back out of this and save the Republicans' political future. But we don't need to get too ahead of ourselves. For now, these tariffs are a good reminder that just because our guy is in the White House doesn't mean we get to sit back and relax and assume everything's going to be great. If you want to stay free, you're not allowed to do that. I'm sorry, you just can't. As Thomas Jefferson famously said,"...the price of liberty is eternal vigilance." We must always be vigilant, always be watching, always suspect those who hold political power over us. And these tariffs are a much-needed reminder of the truth of Jefferson's words.