A fundamental economic underestimation should be essential to analyse society and economy, and especially when it comes to enforcing peaceful individuals. Economics is necessary to think clearly about the social consequences of individual actions and government interventions. The opposite was just given by President Donald Trump. The Wall Street Journal said that when car prices rise on March 30, 2025, “Trump said he didn’t care much”):
“I don’t really care because if the prices of foreign cars go up, they’ll buy American cars,” Trump said. “If that’s the case, people are going to buy American-made cars. We have a lot.”
The president does not seem to understand that tariffs equal rising prices for competing commodities produced domestically. In this case it’s an American car. This is why domestic producers of customs goods are happy. Increased product prices are protected against foreign competitions. The duties are “protected” only if domestic producers are able to obtain the price of Heiger. (For more information on this topic, see two recent posts, “Fundamentals on International Trade” and “Aluminum, Economics, Freedom.”)
So no one should have been surprised when Trump seemed to have clearly warned the ridiculous people in the domestic automobile to not raise prices under a punishment penalty. I’ve been late for committing this threat (see WSJ report on March 30th):
The Wall Street Journal reported last week that Trump warned executives that the White House would appear to be at a disadvantage in such a move.
“I’ve never said that,” Trump told NBC.
Didn’t he do it? Perhaps he entertains “basic overall” beliefs, as reported by the WSJ, to use the terminology of his trade adviser Peter Navarro.
“Looking this basically all around, as they say, consumers and the US will be better, including all the work they have got,” Navarro said.
“They” certainly aren’t serious economists and will not speak on those tours. But only “basic overall” intuition must be that Navarro can justify the trade war that is pushing Trump forward.
When he used the installation of economic theory to reason about such problems, Navarro was closer to reality. His 1984 book, The Policy Game: How Special Interests, and Ideologue steals America (John Wiley & Sons), he specifically explains how tariffs drive the price of competing goods produced domestically.
Without trade barriers, from cars and apparel to shoes and televisions, they are offered to consumers at a lower price (or higher quality) than if they were manufactured by US producers. However, if a device such as a duties collides, the amount must pay the obligation to the US government to sell his product. This effectively raises the cost of importers and forces imports to raise prices through all or part of their obligations. US producers have been able to raise prices previously reduced by import competition. [pp. 75-76, my emphasis]
Navarro offers other discussions, although less original, along with at least a combination of economic analyses over the centuries.
But as economic analysis has shown, the choice is not between presenting the chimney industry or relying on a high-tech wonderland. Rather, under the spurt of import competition, two world post-you can invest in rapid technological developments that promise to merge with the two world post-you, between a protected but ineffective industrial base and a more innovative and innovative sector. [p. 89]
The clear danger of this [protectionist] The trend is the full-scale world trade war. … And history is painfully taught, and the war of 11 protectionists begins, and the outcome is a downward spiral that is deadly and well applicable by the global economy as a whole.
In fact, if the world is sucked into this spiral, then the great profits from trade are at the expense of it. Such sacrifices may save sub-jobs in Shell Tread domestic industries, but destroy as many jobs as other home industries, particularly those that rely heavily on export trade. At the same time, consumers will pay billions of dollars at higher prices for many limited products. [pp. 55-56]
Of course, he couldn’t blame the humor for changing HI’s opinion, explaining why he thinks he’s before now. However, the basic overall purpose of Tantra and New Era sorting does not serve as a rational explanation. Also, to cooperate with politicians of all kinds, see my article “Peter Navarro’s Conversion,” Regulations, Fall 2018.
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Basic overalls from Dall-E and your humble blogger
