The Trump Trade Files Pt. 2

This is part 2 of a series on tariffs and President Trump’s trade policies. To begin at the beginning, click here.

So, what’s the point of tariffs, really?

What are tariffs actually meant to achieve? And is there a clear goal behind this dramatic shift in U.S. and global economic policy, or are we witnessing a major misunderstanding, perhaps even a disregard for U.S. economic history?

The reasons given for tariffs depend on who's talking. So, let’s lay out the statements made by those put in charge of selling the tariffs and dramatic shift in US trade policy to the public. Doing so will help us see if there’s a consistent and coherent strategy behind what is one of the biggest economic shifts in a generation.

Step one will be separating fact from fiction. That means stripping away political spin and emotional appeals so we can identify which claims are supported by real evidence. Once we do that, we can track how those policies actually perform by watching the data, not just the politically convenient headlines.

To start separating fact from fiction, we first need a clear record of what’s actually been said. So let’s walk through some of the key statements which have been made by Trump, Navarro, Lutnick, and Bessent.

Claims made to justify tariffs.

Trump

• US lost 90,000 manufacturing plants and factories since NAFTA was signed.

• The US was strongest economically, “relatively speaking,” from 1870 - 1913. Due to tariffs.

• The Great Tariff Commission was established in 1887 whose sole purpose was to decide what to do with the vast sums collected by tariffs.

• “Tariffs are about making America rich again and making America great again.”

• When Trudeau asked Trump what could be done about tariffs prior to the announcement Trump stated, “I told him that many people have died from Fentanyl that came through the Borders of Canada and Mexico, and nothing has convinced me that it has stopped.” This implies Fentanyl coming across the border is one of the reasons for the tariffs.

• Initial Mexico and Canada tariff orders said they were put in place as a consequence of illegal immigration and smuggling. (This is from a Feb 1st White House Fact Sheet on tariffs on imports from Canada, Mexico, and China.)

• The Great Depression “would have never happened” if the US maintained a strong tariff policy. The US later “tried to bring back tariffs to save our country, but it was gone.”

• “You know, in the old days, about 1870 to 1913, the tariffs were the only form of money. And that’s when our country was relatively the richest. We were the richest.”

Navarro

• Through WTO rules, the rest of the world cheats us with tariffs and non-tariff barriers.

• “This is not a negotiation.”

• “The Fed isn’t going to do it’s job, but the long bond is doing it.” - Made after tariffs were announced.

• “The {tariff} methodology is perfectly sound. It was done by the Council of Economic Advisors based on long-term studies that are in the academic literature.

• If you look at our auto industry, we are an assembly line for German engines and transmissions, right now.”

• “Each trade deficit that we have with each country based on the flow of imports and the exports and how much we actually trade with them represents the sum of all cheating. The trade deficit is the sum of all cheating. And what you simply do is calculate the tariff rate which would be required to eliminate the trade deficit. And this is a National Emergency based on chronic massive trade deficits which cost our jobs, our factories, and transfer our wealth to other foreign nations and therefor threaten our National Security, Economic Security. So that’s the way to think about it.”

• In regards to the tariff formula: “The calculation itself is based on very sophisticated analysis in the trade literature for decades and it relates to various imports elasticity, thing like that, coupled with what happens to the currency. And when you map that out you get the formula, you get a rate.”

• In regards to the tariff formula: “Done by Council of Economic Advisors coupled with USA Trade Representative which have huge staffs of economists who study this and been studying this for years.”

• “The President is fighting a drug war, not a trade war.” “This is not just a drug war, it’s a terrorist war, and a border invasion war.”

Lutnick

• “Reordering of world markets.”

• US is getting taken advantage of by our trade partners around the world.

• Trade policies were made to make the rest of the world rich, and the US poor.

  • By taking our factories from us.

Bessent

• Private sector essentially has been in a recession since the Biden years.

• Market decline caused by DeepSeek, not Trump

• Hamilton the original “Tariff Man” who used tariffs for two main reasons:

  1. Fund new nation.

  2. Protect American interests.

  3. Tariffs to negotiate. (Trump has added this 3rd leg.)

• Americans haven’t recovered from the China shock

• The coasts have done great while the middle of country has seen quality of life decline.

  • Lower life expectancy

  • Don’t think their children will be better off than they are.

  • “A lot of people don’t care.”

• Some of our trading allies have been bad partners.

• “If tariffs are so bad, why do they (other countries) have them?”

• “If the American consumer is going to pay all of the tariffs, then why do they (US trading partners) care about tariffs.”

• We’ve stopped making things and have gone to a highly financialized economy.

• US has stopped making things, specifically things for national security.

• COVID led to a beta test that showed that these highly efficient supply chains are not strategically secure. “COVID woke the world up to these supply chain problems. “

  • We don’t make our own medicines, semi conductors, or ships.

  • “Economic security is National Security.”

• Tariffs are an attempt to redistribute wealth/more of the profits. “Give Americans real wage gains and enhance their lives.”

  • “Wall St has done great. They can continue to do well, but it’s Main Street’s turn.”

• Looking to equalize distributions of capital.

  • “Top 10% of households own 88% of equities.”

  • “Next 40% owns 12% of stock market.”

  • “Bottom 50% has debt. They have credit card bills and rent their homes.”

• Record number of Europeans vacationed in the US in 2024. At the same time there was a record number of Americans using of food banks.

Claims made if new trade policy works:

Trump

• “Tariffs are about making America rich again and making America great again. And it’s happening. And it will happen rather quickly. There will be a little disturbance but we’re OK with that. It won’t be much.”

• Tariffs will eliminate the need for income taxes.

Navarro

• “The goal is to make people make things here again.”

• “I see them as a tax cut, because they’re going to help pay for the biggest tax cut in American history. Every dollar that we extract from foreigners who are cheating us is going to go to the American public in the form of debt reduction and tax cuts.”

Lutnick

• American Production will rise.

• Robotics will have a renaissance and how it is possible

• “Greatest surge in training for what we call trade craft. Teaching people how to be robotics mechanics, engineers and electricians and HVAC for hi-tech facilities.”

• Commitments to build factories have already made.

• US is $29T economy. Consumes $20T in goods.

• “US will become producers of much more of what we consume. It will become a balance. Interest rates will be much lower. USA will be much stronger. We are growing much too much like the rest of the world. Our growth rate should be double or triple them, because we are the greatest economy and we are feeding the world.”

Bessent

• On one side the President is reordering trade. On the other side the US is shedding excess labor in the Federal Government and bringing down federal borrowing. On the other side that will give us the labor we need for the new manufacturing and will re-lever the private sector.

• For the last four decades, Wall Street has grown wealthier than ever before. And it can continue to grow and do well. But for the next four year’s it’s Main Street’s turn. It’s Main Street’s turn to hire workers. It’s Main Street’s turn to drive investment. It’s Main Street’s turn to restore the American Dream.

Comments made about specific US industries which seem to be the focus:

• Autos

  • 95% of cars bought in Japan are made in Japan. Hard to sell a car there.

    - Navarro

  • Germany sells 6 autos for everyone one they buy from US.

    - Navarro

• Pharmaceuticals

  • All pharmaceutical ingredients are currently manufactured in Asia.

    - Lutnick

• Beef

  • Sen. Basso: “Australia has sold $29B worth of beef in the United States, and we haven’t been able to sell one hamburger in Australia because of barriers.”

Are the issues they are trying to correct real?

While there are a lot of claims and accusations being made, not all of them have specific examples and some are just outright provably false. So, the first order of business will be eliminating both the baseless claims with no stated reasoning behind them and the outright lies.

Some of the claims “feel” like they are true, but upon closer inspection turn out to be erroneous.

And some have a lot of merit and is something which policy makers should be taking action on. While also reminding ourselves that the only constant is change and that it is impossible to live in today’s world with policies which worked or seemed to work decades and centuries ago.

So in the next post, we will begin deciphering the chaotic messaging by pointing out the outright falsehoods stated to try and justify the biggest economic policy shift in a generation.

Once we get rid of the BS and emotional fallacies, we can then zero-in on the claims which can be verified which will then allow us to find ways to track each.

By doing so, we will be able to track the success’ and/or failures of this extreme economic policy shift.

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