RUTHFULLY YOURS

Donald Trump is back—and so is the tariff. “It’s a beautiful word, isn’t it?” the president quipped before the joint session of Congress on Tuesday—so beautiful that he referenced tariffs 17 more times in his address. In the short time since his second inauguration on Jan. 20, Trump has imposed—and sometimes walked back or temporarily suspended—tariffs on China, Canada, and Mexico, and declared a policy of tit-for-tat “reciprocity” or retaliation for any foreign tariffs on American exports that are higher than U.S. tariffs on imports. And he has justified tariffs with multiple rationales, ranging from protecting or reshoring defense-critical American industries to pressuring America’s neighbors to take action to reduce the cross-border flow of illegal immigrants and drugs like fentanyl. In fact, he told members of Congress, tariffs were “about protecting the soul of our country.”

The chaotic and inconsistent nature of Trump’s second-term policy to date can be criticized. But when it comes to tariffs as a tool of economic statecraft in general, the gap between establishment rhetoric and actual government practice is big enough to drive a Chinese EV through.

The audiences of the dying legacy media are told that the tariff is a destructive policy revived by politicians like Trump who fail to understand elementary economics, which teaches that free trade benefits all sides all the time everywhere, with no exceptions. But from North America to Europe to Asia, developed countries are ignoring mainstream economists and their amen corner in the subsidized libertarian think tank world and slapping tariffs onto imports in favored industries like electric vehicles and renewable energy. Governments are resorting to tariffs and industrial policy, not because their prime ministers and presidents flunked Econ 101, but because they do not want their economies deindustrialized by a flood of low-priced, state-subsidized Chinese imports.

The Chinese import threat is why Canada has levied a 100% tariff on imported Chinese EVs, along with a 25% surtax on Chinese steel and Chinese aluminum. The European Union has slapped electric vehicles made in China with tariffs ranging from 7.8% to 35.3%, on top of the standard European tariff of 10% for imported automobiles. India imposes tariffs of 70%-100% on imported electric vehicles from China and other countries.

Like the leaders of Canada, the EU, and India, former president Joe Biden is not generally thought of as a disciple of the Donald Trump school. But last May, the Biden administration imposed new duties not only on Chinese EVs but also on Chinese-made steel and aluminum, semiconductors, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products. According to the Biden White House press release in May:

China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90 percent of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care—creating unacceptable risks to America’s supply chains and economic security.

In December, the Biden administration announced new restrictions on the export of chip manufacturing to China. The Biden White House even taunted the first Trump administration for not having gone far enough with its protectionist policies: “The previous administration’s trade deal with China failed to increase American exports or boost American manufacturing as it had promised.”

The rehabilitation of tariffs, then, is a belated course correction in response to the rise of China, which has been driven by U.S. companies that offshored manufacturing. The Middle Kingdom has lost its position as the world’s most populous nation to India, but it has surpassed the U.S. as the world’s largest national economy. China dominates global manufacturing, accounting for a market share of around 30% of manufacturing value added in 2023. In comparison, that same year American manufacturing accounted for only 16% of the global total.

In 2023 China produced roughly half of the world’s crude steel. China is the world’s largest automobile maker, accounting for a third of the global total. China’s state-backed aerospace company, COMAC, threatens to take global market share from America’s Boeing and Europe’s Airbus. China is also the world’s largest commercial shipbuilder, responsible for more than half of all shipbuilding. America’s share of the global shipbuilding market is 0.10%. Yes, zero-point-10 percent. Most of the goods shipped across the oceans to and from the U.S. are in ships built in China (51%), South Korea (28%), or Japan (15%). During the COVID pandemic, Americans were shocked to learn how dependent the U.S. is on medical supplies from China, which provides around 30% of active pharmaceutical ingredients used in drugs by value and 78% of the vitamins in the U.S. A single Chinese company, DJI, controls 90% of the American drone market, including 90% of the drones used by American police departments and first responders.

China’s trade with the U.S. resembles that of a dominant manufacturing nation with a resource colony. In 2023, China’s main exports to the U.S. were broadcast equipment, computers, and office machine parts. Apart from integrated circuits, one of the few industries in which the U.S. retains an advantage, America’s main exports to China in 2023 were soybeans and crude petroleum, with the value of soybeans ($15.2 billion) twice that of silicon chip exports ($7.01 billion).

Statistics like these explain why not only the U.S. but most other industrial nations and many developing nations like India are throwing up trade barriers against Chinese imports. If they do not, their national manufacturing industries will be wiped out and they will be reduced to supplying the Chinese industrial superpower with farm products or fossil fuels or services like finance and tourism