Tariff Hysteria
We’ve received many requests for a comment on the recent Liberation Day announcement. You’ve all read that list of countries with the tariff percentages and targets.
I first resisted the idea of commenting. Too much garbage has already been written on tariffs. Why should I add my Catholic opinion?
Still, our friends asked.
Here are my thoughts.
1. First I want to brief you on what classical economic theory says about international trade and tariffs. This theory proposes the idea of “COMPARATIVE ADVANTAGE”. Here is a simple example. The theory says the best overall way to organize international trade is to follow this doctrine. Spoiler alert: It is a false doctrine. It’s NOT Catholic.
2. An example: If the USA is the world’s lowest cost producer of automatic washers and Canada is the world’s lowest cost producer of automatic dryers, then the USA should produce washers and buy dryers from Canada. Canada, in turn, should produce dryers and buy washers from the USA. The USA is said to have a “comparative advantage” in washers. Canada is said to have a “comparative advantage” in dryers. Each country should specialize in its area and “maximize total revenue”.
3. The USA “could” introduce a tariff on washers “to protect its domestic washer industry”. Canada “could” introduce a tariff on dryers “to protect its domestic dryer industry”.
4. If so, the world would cheer such tariffs as being “right”, “proper”, and “okay”.
5. But, is this really true? I say NO.
6. The problem is this theory assumes that “total revenue” is the only thing that matters. The USA would grab all the revenue from washers. Canada would grab all the revenue from dryers. But this is false because total revenue is not the only (or even the main) thing. What about the idea of “self-sufficiency” in which Canada AND the USA each make washers AND dryers? What about the idea of Canada and the USA creating more local employment by having both industries. What about creating self sufficiency in both washers and dryers? Remember: Labor is not going to move from one country to the other to get in on the growth of each specialized industry. This is a false assumption of the old classical economic theory. Labor is not mobile – except for the ultra low cost slave labor created by borderless migration where desperate people undercut wages to get a job, any job – jobs that are not “just-wage” jobs anyway.
7. This current economic theory is globalist, marxist, and antithetical to the Catholic doctrine of the nation state, the Catholic doctrine of the family, and the Catholic doctrine of subsidiarity. I reject it!
8. I am telling people these days to settle down and wait for the dust to settle on tariffs. I say hold onto your portfolio. Moving to cash is not the right answer either. By moving to cash you are departing from your position of owning the best stocks in the best companies and heading towards holding just the currency, which is going to fluctuate MORE than the stocks of the best companies. Moving to cash actually makes you MORE vulnerable. It does not make you more “ready”, as most people think. If a better company comes along or suddenly shows signs of growth you can move just as fast out of “cash” as out of a holding.
9. Now: Let’s add the media storm. Mainly this is political in nature to scare you into believing that inflation or some other economic shock will hurt you. It might do so in the short run if you still want to spend money to buy the high priced “tariffed” goods. You need to check WHAT exactly you actually NEED to buy.
10. Then: Let’s add bond yields, which are going down as you’ve heard. Don’t worry about it because most of you don’t own bonds anyway.
11. The major benefit of the bond yield decline is that the national debt and national budget will be helped tremendously. This will help fix a terrible problem of debt and deficit spending. That’s the real reason for this tariff policy. That and the repatriation of capital and manufacturing.
12. Another side benefit is actually inflation. Here’s why. Take an intensive look at the actual products that will increase in price due to tariffs. If fancy high end women’s clothing from Europe is now going to cost twice as much – who actually cares? Most of you don’t wear that stuff anyway. And if you still do at the new prices, you don’t care about inflation anyway. I say “who cares?” because eventually someone will start a domestic fashion industry and people will be able to buy high end fashion designs locally at less than the high price offshore stuff. THAT is better for your economy because it produces JOBS AT HOME.
Furthermore, do you think that bread, meat, eggs, butter, and potatoes are going to get more expensive due to tariffs? NO, because that stuff is not generally imported from other countries. So, to put tariffs on foreign food is not going to hurt the local citizens because those basic staples are grown locally. The point is to watch closely WHAT products are going to suffer inflation. Not all of them will. And even if they do, eventually a local domestic industry will grow up to solve that problem.
13. Tariffs do not fit the globalist, WEF, marxist, borderless, nation state suppressing, paradigm. Only global businesses benefit from free trade. Not your local hardware store which is being killed by free trade. That’s why the media and most politicians want to criticize tariffs, hate America and vilify it. They want to destroy your economy, your town, and your family. It’s why wrong-headed Canadians are suddenly patriotic about Canada first (“elbows up”) and now boo the US national anthem at games. I’m ashamed.
14. Tariffs will shock the American economy into rebuilding local industry. Canada will have to stop being lazy and selling only to America. It will have to find other markets.
That's the real shock that will happen.
The result will be more Catholic because it will repatriate capital, introduce self-sufficiency, create a country that is truly sovereign and independent, and fulfill the doctrine of subsidiarity. Instead of offshoring production, it will spur on a system in which the country can build ALL it needs INSIDE the country. That’s the best way to stay independent, sovereign, and not controlled by anyone else. Yes, a certain level of international trade will continue. But your country eventually will become “less beholden” to other countries. When that happens, Catholic families and businesses will flourish. You will regain control of your economy.
There you have it. My opinion.
One more thing: Don’t get sucked in by the media hype. Stop reading the mainstream media. It lies. Examine the effects of tariffs and see how such a policy can rebuild an economy, create jobs at home, AND foster independence.
Tariff policy really can end the globalist agenda! And that’s a Catholic thing to do.
Be one of the winners in the local economy. Start a business now. Join the Startup Hub where I teach you everything you need to know to start a business. It begins Monday, April 14, 2025 at noon central.