How Trump’s Tariffs Really ‘Work’

He hails Toyota’s investment, but what about the higher costs and manufacturing job losses?

WSJ editorial. Excerpts:

"Toyota may have made the decision for business reasons unrelated to his tariffs."

"The Japanese car maker’s press release lavished praise on Texas’s pro-business environment and included statements from the state’s political leaders (Attorney General Ken Paxton excepted). No mention of Mr. Trump or his tariffs. Toyota says the new plant will provide “flexibility” from “advanced manufacturing technologies,” which may offset the relatively higher labor costs in Texas."

"The U.S. has lost some 75,000 manufacturing jobs since January 2025, including 25,900 in motor vehicle and parts production. Manufacturing jobs have been declining since early 2023, so not all of these job losses stem from Mr. Trump’s border taxes."

"there’s no question his tariffs are raising costs for U.S. manufacturers. At the same time, foreign retaliation has hurt America’s farmers"

"evidence shows that U.S. companies, workers and consumers are picking up most of the tab."

"auto tariffs on Canada and Mexico alone added about $1,600 to the cost of each car made in the U.S. last year."

"tariffs drove a 10.4% increase in the average suggested retail price of a new car."

"Auto dealers—most of which are small businesses—absorbed about 4.5% of the manufacturer’s price increase."

"Dealers have shed 6,100 jobs since Mr. Trump became President."

"New vehicle sales have averaged 15.9 million in the first half of this year, down from the 17 to 18 million in the five years before the pandemic." 

How Government Spending Enriches the Wealthy

Covid relief programs and easy Fed policy inflated the value of assets such as stocks and real estate

By Vivek Ramaswamy. Excerpts:

"When Washington floods the economy with borrowed and freshly printed dollars, the money flows first into assets owned by the wealthiest Americans—stocks, bonds, real estate. Six relief laws pushed roughly $4.6 trillion out the door in the bipartisan response to the pandemic. The Federal Reserve cut interest rates to zero and more than doubled its balance sheet, from about $4 trillion to nearly $9 trillion.

Only some of that money reached working-class Americans. Economists at MIT found that about a quarter of the $800 billion from the Paycheck Protection Program went to workers who would have lost their jobs. Three-fourths landed in the top fifth of households by income, at a cost of $170,000 to $257,000 per job-year saved—a regressive windfall. The student-loan payment pause tells the same story: It has cost well over $200 billion and—because higher earners carry the biggest balances—most of that relief went to white-collar professionals.

As big government pumped money into the economy, assets boomed: The stock market has roughly tripled from its March 2020 low. The wealthiest 10% of households own 89% of all stocks, according to 2021 Federal Reserve data. The top 1% gained more than $6.5 trillion in equity wealth during the pandemic, while the bottom 90% added just $1.2 trillion. The wealth share of the top 1% hit a record high in mid-2021, and American billionaires’ fortunes swelled by roughly 70%."

"Consumer prices peaked at 9.1% in June 2022, with inflation growing at its fastest pace since 1981. Groceries rose 12.2% in a single year and gasoline nearly 60%. As paychecks lagged, real wages fell—down 3.6% over the year ending in June 2022"

"a post-pandemic property tax that hit states like Ohio hard. The only meaningful asset most middle-class Ohioans own is their house, and home prices in Ohio rose over 25% between 2020 and 2022. That paper gain was a financial curse for families intending to stay put: While real income remained flat, tax bills went up. Ohio homeowners absorbed, in 2023, the largest reappraisal shock on record. One analysis found the increase was more than seven times the size of the previous cycle’s, averaging nearly 35%." 

‘How to Win a Trade War’ Review: The Times of Tariffs

Germany before World War I provoked backlash because of its rise in exports and overproduction, similar to China today.

By Theodore Bunzel. He is the head of Lazard Geopolitical Advisory. He has worked in the political section of the U.S. Embassy in Moscow and at the U.S. Treasury Department. Excerpts:

"“How to Win a Trade War” shows us that, even in the age of Trump, many of today’s trade tensions are a historical rerun. Germany before World War I provoked backlash because of its sharp rise in exports and overproduction, similar to China today. Its cornering of an “extraordinary 90 percent of global production” of chemicals and dyes sparked fears of dependency among the Allies. Even the White House’s coercive Liberation Day tariffs have an echo in history: 1870s France hiked tariffs 24% on its neighbors and demanded they negotiate more favorable trade deals within six months, a gambit that—like Mr. Trump’s—largely succeeded in forcing trade partners to submit to new treaties.

With protectionism becoming more fashionable, Ms. Keynes and Mr. Bown provide a helpful reminder that tariffs are, generally speaking, economically destructive and rarely achieve their stated goals. Such policies impede growth, chill investment and—outside of commodities—are overwhelmingly paid for by the importing country. Even on trade deficits, the authors remind us, tariffs have historically had largely insignificant effects. While the evidence on tariffs and their effects on industrialization is more mixed, for every Japan or South Korea—which used barriers to turbocharge manufacturing in the postwar era—there are the smoldering examples of Brazilian personal computers or Indian autos."

Why Do Democrats Hate Medicare Advantage?

It’s the best program in the entire U.S. healthcare system, including even employer-sponsored plans

By John C. Goodman. Excerpts:

"Medicare has already had a competing public option for more than two decades. It’s called traditional Medicare, and it has been losing the competition. More than half of all Medicare enrollees are in private plans."

"What Mr. Doggett calls the “giant private insurance companies that profiteer off Medicare” are mostly the same companies that are administering Medicaid."

"78% of [Medicaid] enrollees are in private managed care plans, or MCOs."

"enrollees are normally required to join an MCO. Yet it’s rare to hear a congressional Democrat advocate less spending on “giant” MCOs “profiteering” off care for the poor."

[Medicare Advantage] "is the only program in our entire healthcare system in which a doctor who discovers a patient’s previously unknown health problem can send that information to the insurer"

"Medicare Advantage plans are the only plans in our healthcare system that actually want sick people as enrollees."

"for sick people in [ObamaCare] marketplace plans, the out-of-pocket exposure is the highest found anywhere." 

"Significantly more low-income beneficiaries were enrolled in Medicare Advantage plans (68% vs. 32%) in 2023. In 2021, such plans were also the preferred choice of black (59%) and Hispanic (67%) enrollees relative to whites (43%)."

"Medicare Advantage is the only program in our healthcare system in which health plans can specialize in the treatment of specific conditions"

"Medicare Advantage plans make money by keeping people healthy."

"Medicare Advantage plans make insulin available free in special-needs plans for diabetics."

"Most employer plans and exchange plans haven’t done the same because free or cheap insulin would attract diabetic enrollees"

"In traditional Medicare . . . “20% percent of diabetes patients routinely get ulcers and 20% of those ulcers turn into amputations.” In Medicare Advantage, the number of amputations is a tiny fraction of that." 

 

Socialism and the Decline of the Black Family

Children need fathers, but social fragmentation gives an advantage to those who seek centralized power

By Jason Riley. Excerpts:

"socialism’s impact on the traditional family structure is no less concerning. Children from intact families are more likely to finish school and avoid poverty. The absence of fathers is strongly correlated with teen parenthood, drug addiction and involvement with the criminal justice system. The cultural anthropologist Margaret Mead wrote that “every known human society rests firmly on the learned nurturing behavior of men” and that civilization “depends upon social inventions that will make each generation of males want to nurture women and children.”"

"socialists such as Karl Marx and Friedrich Engels dismissed the traditional family as a tool of oppression"

"many of the social and economic problems in low-income black communities stem from the sad fact that some 70% of black children are born to unwed parents and nearly 45% live with a single mother."

"Asians are the highest earners, followed by whites, Hispanics and blacks. Similarly, Asians have the highest marriage rates, followed by whites, Hispanics and blacks. Maybe it’s no coincidence."

"Following emancipation, one of the first things black people did was seek out spouses and children from whom they had been forcibly separated during slavery."

"Between 1890 and 1950, black men and women married earlier and were more likely to be married by 35 than their white peers, Mr. Squires writes. That suggests black attitudes toward marriage and child rearing today are the product of incentives and circumstances that developed long after the end of slavery. “More than 70 percent of black children were born to married parents in 1965—a century after the abolition of slavery,” Mr. Squires writes. “Today, only 30 percent are."

"The black family was more intact after three centuries of chattel slavery than after three generations of the federal government’s ‘war’ on poverty.”" 

Hamilton Was No Protectionist

The first Treasury secretary backed tariffs mostly to raise revenue and promote free trade

By Phil Gramm And Donald J. Boudreaux. Excerpts:

"the 21st century, when the average trade-weighted tariff rate of Organization for Economic Cooperation and Development member countries was below 3% and almost identical to that of the U.S., and the OECD found that the nontariff barriers of U.S. trading partners aren’t significantly higher than America’s nontariff barriers, it’s highly doubtful that Hamilton would support Trump policies."

"It’s true that Hamilton endorsed some elements of the infant-industry argument for tariffs, but he did so because American industry then was indeed in its infancy. America today occupies a completely different position"

"The conditions that led Hamilton to support tariffs have long since disappeared. He never saw protection of domestic manufacturing as a long-term policy but rather insisted that “continuance of bounties on manufactures long established must almost always be of questionable policy.”"

"among the greatest forces fostering U.S. industrialization was its trade deficit and resulting capital surplus"

"Hamilton described net inbound foreign capital as “a precious acquisition . . . a most valuable auxiliary, conducing to put in Motion a greater Quantity of productive labour, and a greater portion of useful enterprise than could exist without it.”"

"the British and Dutch invested heavily in America. They grew wealthy on those investments, and so did America."

"Hamilton knew that high protective tariffs, by discouraging importing and encouraging smuggling, suppressed those [tax revenue] collections."

"From 1816 through 1830, industrial production grew at an average annual rate of 4% as tariffs rose. From 1831 through 1860, industrial production exploded by 6.7% a year as tariffs fell." 

"between 1866 and 1900 average tariff rates fell from 41.8% to 27.6% and industrial production grew at an average annual rate of 5.6%."

"Frank Taussig concluded in 1915, it [industrialization] was fueled by “the intelligence and inventiveness of the people; these being promoted again by the breath of freedom and competition in all their affairs.”" 

Does Rent Control Redistribute from Poorer to Richer?

From Jeffrey Miron.

"Rent control policies are gaining momentum on the campaign trail and in state houses. New research, though, confirms something economists have argued for a long time: rent control has serious adverse effects that undermine its rationale..

The study

examines the effects of a rent control ballot measure passed in Saint Paul, Minnesota, in November 2021, on property values. … [Researchers found that t]he law decreased rental property values by reducing expected future rental income and landlords’ incentives to invest in maintenance.

In addition,

the effects of Saint Paul’s rent control law varied significantly by the income levels of renters, landlords, and owner-occupants. On average, rent control generated financial gains for renters and losses for owners, as expected. However, higher-income renters gained more than lower-income renters. … [Also,] lower-income landlords lost more wealth relative to their income than higher-income landlords. Finally, owner-occupants, despite not directly participating in the rental market, bore the greatest share of the total losses.

The study

shows that the benefits of Saint Paul’s rent control law are distributed regressively to renters, while the costs are distributed regressively to landlords."