On Tariffs, Then and Now

In the late 19th century, the GOP argued that tariffs would result in higher wages, as the industrialists who benefited from them would gladly pass their excess profits on to their workers. The actual results, as you might expect, were totally different. The industrialists pocketed their earnings–occasionally returning them to the public in the form of philanthropic enterprises they deemed appropriate–but did nothing to improve the lot of workers.

Trump and his acolytes will make a similar argument about tariffs this year. The problem is that even large tariffs won’t make import substitution a viable approach for many industries, and there is no pool of workers to handle the hypothetical jobs in any event. Using an Argentinian approach to an economy that is already running about as hot as it can without creating more inflation makes no sense whatsoever.