Last April, Paul Krugman wrote the following about the reciprocal tariffs President Trump had just announced: “This is a much bigger shock to the economy than the infamous Smoot-Hawley tariff of 1930.” Krugman trotted out that trite analogy not because he really believed Trump’s tariffs were comparable to Smoot-Hawley, but because he knew his Substack subscribers would vaguely recall reading about the latter in high school and feel intelligent. Six months later it’s blindingly obvious that Trump was right about the tariffs and Krugman’s portentous predictions were utterly moronic.
The United States is the largest consumer market on the planet…. We could bankrupt most of the world’s nations overnight by refusing to buy their exports.
It goes without saying, of course, that the corporate media parroted Krugman’s apocalyptic warnings about the tariffs without acknowledging that Trump’s Democrat predecessors had also deployed them. President Obama, for example, imposed a 35 percent tariff on Chinese tires and President Biden levied a 25 percent tariff on Chinese steel and aluminum. Yet Americans were repeatedly told that the Trump tariffs would inevitably lead to a global trade war in which countries would impose retaliatory tariffs which would plunge the United States economy into a recession. As Matthew Lynn put it last Friday in the Washington Post:
When President Donald Trump imposed huge tariffs on imports in April, the mainstream economic establishment and the big forecasters on Wall Street were virtually united on one point: The tariffs would trigger stagflation, at best, and a deep slump, at worst. It sounded like life would resemble a post-apocalypse Netflix series, with survivors dodging zombies and fighting one another for the last few items at the mall … These experts who purport to understand how the economy functions saw the tariffs as a catastrophe. They were wrong; they need to admit it.
Fat chance. The doomsayers are still making preposterous claims about the tariffs. Glenn C. Altschuler, Emeritus Professor of American Studies at Cornell University, ridiculously cited a public opinion poll yesterday in The Hill: “In a poll taken in August by the Pew Research Center, 61 percent of respondents did not approve of Trump’s tariff policies. And 55 percent indicated the levies will have a negative impact on them, their families and the country.” This tells you nothing about the economic effects of tariffs. All it demonstrates is that the public has been subjected to an incessant bombardment of anti-tariff propaganda.
For anyone interested in actual economic data, the economy is growing at a robust 3.8 percent, the unemployment rate is at 4.3 percent — which most economists consider full employment, real wages are increasing, particularly for blue collar workers, real disposable income is consistently rising and inflation remains below 3 percent. As for the tariffs, they are already generating revenue at an annualized rate of at least $350 billion. According to the Congressional Budget Office tariffs produced $195 billion in revenue during fiscal year 2025, which just ended September 30. As John Carney points out at Breitbart Business Digest:
What we’re actually seeing is something economists have long theorized as “optimal tariff theory.” A country with a globally dominant consumer market can employ tariffs to force foreign manufacturers to lower prices to maintain their exports. It can also successfully pressure other countries to reduce their own import barriers by threatening even higher tariffs. Finally, the household sector can force a redistribution from the corporate sector by refusing to accept the pass-through of tariff costs.
This is the central point that anti-tariff types seem unable to grasp. The United States is the largest consumer market on the planet. At nearly $20 trillion, it dwarfs the European Union ($9.6 trillion) and China ($7.2 trillion). In other words, the U.S. is the world’s biggest, richest customer. We could bankrupt most of the world’s nations overnight by refusing to buy their exports. This is a reality that President Trump has frequently pointed out, and it is what people like Paul Krugman studiously ignore. It is why even the dullards of the Biden administration kept Trump 1.0 tariffs in place and actually expanded them to cover other goods.
Inevitably, the Democrats have sicced their flying monkeys in the American Bar Association on the Trump administration to halt its well-thought-out tariff policy. The result demonstrates why the only people more ignorant about international trade than academic economists are federal judges. In a 7-4 decision by the international trade experts on the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. ruled in early September that most of Donald Trump’s tariffs are illegal. This will now go to SCOTUS, where the Constitution and federal law (usually) prevail. The Trump administration will win and his tariffs will remain in place.
And, despite the opposition of the Democrats and the superstitions of some conservatives, that’s a good thing that will bring real benefits to most Americans. During the 2024 presidential campaign Trump promised to do this and he is honoring his pledge. As former president Barack Obama famously put it, elections have consequences and President Trump won.
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