The US Government is using tariffs to correct an imbalance in imports versus exports. The US feels that it is unfair for countries around the world to sell more stuff to America than they buy from America. Thus, the government hopes that by making imports more expensive citizens may be dissuaded from shopping abroad.
But this avoids the real issue, which is that America buys foreign goods because they are better than American-made equivalents. America excels in technology and digital services. And that is about it.
The top 16 best-selling passenger cars in America are all from overseas (although, we lead the world for trucks). If US-made cars were better, wouldn’t we be buying them? Tesla is the leading electric vehicle manufacturer, but BYD (Build Your Dreams) is closing in fast and has overtaken Tesla globally.
The Germans have cornered the market for precision engineering, engineered machines, equipment and parts. The Italians, Spanish and the French lead the fashion world. The Chinese and Japanese have locked up the market for computers and cellphones. China supplies 31% of our pharmaceuticals and India provides another 26%. Seventy percent of rare earth minerals come from China and they process 90% of them. In addition, America does not rank in the top ten countries for education or healthcare – essential for a thriving population and economy.
Foreign countries have invested in manufacturing and infrastructure, making logistics, and freight transport cheaper and more efficient. America has abandoned rail for freight transport in favor of trucks and hollowed out its manufacturing capacity, ceding this to other countries. Meanwhile, Japan and most of Europe have trains that travel at more than 500-600 kilometers per hour – top speed for the US is Amtrak’s Avelia Liberty train at 300 kilometers per hour.
All this suggests that other countries have invested in their specialties and outpaced the US. Most people would conclude that the solution is to up our game, not penalize countries who have mastered production and delivery of their products and make better stuff than we do. If we were much better at making things, people would buy them.
We don’t need tariffs. We need a coherent investment strategy in education, manufacturing and infrastructure to raise the level of our capacity and quality ASAP. Then other countries would be complaining that THEY have a trade deficit!
This is Spot On!!!
It’s important to look more at improvement, rather than tearing things down, and bullying. It is really time for us (The whole world) to stand together, we all need to find ways to work together…the world is getting smaller every day, and this confusing Tariff agreements being made, are making it a challenge for working together.
And tariffs do not make for good neighbors, either!
Great points, Lance. While our tendency is to point the finger at one person in this tariff war, you have alerted us to a decline that spans multiple presidencies and multiple parties. In most enlightened societies, faced with a crisis humanity comes together, putting aside our differences and standing arm in arm. Enlightened leaders then guide that energy and collaboration toward practical, workable solutions. Unfortunately I see no enlightened leadership in America today, sadly. But the rest of the world is finding new partners, new allies and new friends. The COVID pandemic awakened us to the need to think differently and pivot. The tariff battles are reminding us that we tried to hit the snooze button and go back to “normal.” The world is a different place and America’s star is fading fast. A strong US is good for the world, and I look forward to seeing true leadership emerge to bring them back to brilliance.
Great comments, Rod. I agree – the border is a human creation, and it does not remove or cancel our brothers and sisters south of us from our lives – we are kin and America is the best option for good neighbors available to us.
Dr. Secretan, this article really struck a chord with me. You’ve framed the issue in a way that deeply resonates — rather than trying to “protect” markets by penalizing others, we should be focused on raising our own game here in Canada.
What stands out most is your point about how other countries have doubled down on their strengths, from Germany’s precision engineering to Japan’s and Europe’s high-speed rail, to China and India’s dominance in pharmaceuticals. It’s not about who can build the highest wall; it’s about who can build the better product, system, or service.
The idea that tariffs are a symptom of deeper systemic shortcomings in education, infrastructure, and manufacturing is critical. Investing in these areas would not only close trade gaps but also create the kind of pride and innovation that make people want to buy a product, no matter the country of origin.
Your closing vision is spot-on. I can imagine the day when the complaint is that other countries have a trade deficit with us here in Canada because they value the quality, design, and innovation we offer.
Well said and very timely.
Thanks for this David. The main exports for Switzeralnd are gold, chocolate, pharmaceuticals, jewellery and watches, which, for the most part, they do better than most other countries. So they will now pay a 39% tariff. Will we buy less from them as a result? Or should we focus on trying to match their speciaized expertise? Or just recognize that they are better at some things than we are, AND we are better at some things than they are – and balance it out from there?
This was a thought-provoking and timely piece Lance. A few reflections from a Brit on economic and geopolitical standpoint!
Trade, when truly free and fair, lifts all boats. Comparative advantage is a foundational principle of economics: it’s perfectly rational for Germany to excel at automobiles, while the U.S. leads in tech and services. Artificially distorting that with broad tariffs almost always leads to lower efficiency and higher costs for everyone.
Your critique of the U.S. economy may understate its performance. Since the 2008 financial crisis, the U.S. has actually outpaced most developed peers (UK, Japan, France, Germany) in real GDP growth, productivity, and employment. Of course, this comes at the price of greater wealth inequality which is something the U.S. tolerates more than most other developed countries, for better or worse.
I’m generally opposed to tariffs, especially as a blunt policy instrument. It’s worth noting that many of Trump’s so-called “trade deals” are better described as tariff damage-control agreements rather than strategic economic partnerships (the U.S.-UK deal being a clear example). There’s no real structural reform in these arrangements.
That said, not all protectionism is irrational. A modest level of self-sufficiency in critical industries such as food, semiconductors and steel. These can be justified on national security grounds. But even then, protection should be carefully targeted and transparently justified.
Trump’s approach has been almost the opposite: erratic, confrontational, and lacking expert guidance. Instead of strategic planning, we’ve seen a kind of tariff “shock and awe,” alienating allies and damaging credibility. Had a long-term, consultative plan been pursued, with input from economists and trade diplomats, the outcomes may have been more sustainable and broadly accepted.
Finally, you’re absolutely right to point out that economic policy has merged with military leverage. The recent tariffs on European allies came in the shadow of NATO negotiations, weaponizing economic tools to extract concessions. While power politics are nothing new, the bluntness of this transactional model has frayed long-standing alliances. Europe won’t forget being treated as a bargaining chip rather than a partner.
Thanks again for the stimulating post. It’s clear that trade policy today is about far more than trade, as its where economics, strategy, and values intersect.
Thanks for this very thoughtful post, Stewart. I agree with you. The issue for many countries now comes down to this – Can we trust America? Or is this simply an era of much harder-nosed negotiations than we have been used to?