Donald Trump calls tariffs beautiful. He also called April 2, 2025, the day on which many tariffs were imposed, “Liberation Day”. I am not sure he understands tariffs. I am not sure I understand tariffs either. Many commentators thought Liberation Day meant people—ordinary people—would be liberated from their hard-earned money. At least much of it.
Historically, countries like the United States, while they were developing, imposed tariffs on foreign goods in order to protect local working men and women and businesses. That was a laudable goal. And often it worked.
The problem is tariffs are very inefficient. They are blunt instruments.
We are told they levy a heavy cost on the country that imposes them. The ordinary people in that country must pay more for the goods they want to buy from foreign companies so locals will buy their goods instead. That’s why Canadians think Americans are foolish, for tariffs will inevitably drive up the costs of out of country goods allowing local producers to compete. But it results in inefficient producers getting more money than they otherwise would. That is certainly not free enterprise. It is the opposite of free enterprise. I think that is why economists think free trade—trade without tariffs or artificial trade barriers—such as farm production quotas or protectionist policies are not favoured by most economists because they are inefficient.
Added to that, tariffs are extremely subject to arbitrary benefits. That is why Trump loves them so much and thinks they are so beautiful. He is allowed to exercise executive power and grant exceptions to people or businesses he favors whether they deserve them or not. That is corruption, but it is exactly the type of corruption Trump wants, because it gives him so much power. Anything that gives him power is beautiful.
But that does not make tariffs beautiful. It makes them ugly!