Death & Tariffs

Death, Tariffs and Going Viral

On Wednesday afternoon after market close, President Donald Trump announced that the U.S. will be putting tariffs on 150+ countries. A baseline 10% tariff is currently in effect as of Saturday and the “reciprocal” ones come online at 12:01 am on April 9. The news tanked the stock market and sent social media into a frenzy. Today we’re going to talk in-depth about tariffs and economics. Don’t worry, my goal is to make it easy to understand.

Liberation

During Trump’s “Liberation Day” event, he revealed the list of countries he would be tariffing. The countries ranged from China to Zimbabwe (yes… Zimbabwe). These were supposed to be reciprocal tariffs, meaning they would apply the same amount of tariffs other countries applied to the U.S. When the numbers came out, to everyone’s surprise, they were much higher than expected. It turns out what the Trump administration did was divide the country’s trade deficit with the U.S. by their exports and chalk the rest up to “currency manipulation” and “trade barriers.” These tariffs are not reciprocal by any means.

During Liberty Day, Trump stated that his goal with these tariffs is to reduce taxes, pay down national debt, and bring manufacturing back to the U.S. He also stated that these tariffs would ultimately lower prices for consumers. There are two types of people in the world right now: people who take Trump seriously and people who think almost every big move he makes is a “negotiation tactic.” Me? I lean on the side of taking Trump at his word on matters of this caliber. If you’re in the “negotiation tactic” camp, ask yourself: what kind of negotiation is he doing with Zimbabwe ($35B GDP) and Angola ($84B GDP)?

Will These Tariffs Work?

The theory behind these tariffs is that if you tax U.S. imports from foreign countries, companies will be incentivized to build factories inside the U.S. instead of trying to ship products domestically. Tariffs protect local industries and jobs. It’s self-explanatory why tariffs are popular with some people. Unfortunately, life isn’t always that simple. What sounds good in a perfect world may not work out in reality.

The more advanced human civilization got, the more we started to trade with each other. One of the earliest products to be traded was wine. The Phoenicians used their trade routes to distribute wine and practices across the Mediterranean. Between 1550 BC and 300 BC, they expanded their maritime network from the Levant to North Africa, the Greek Isles, Sicily, and the Iberian Peninsula, introducing grape cultivation and winemaking techniques to these areas..

As people built better ships and discovered new lands, global trade expanded. Some countries started to realize that since they only had a certain amount of labor, it was only possible to produce so many products. So, if they were relatively good at producing certain goods, it made more sense to focus their labor and capital on those and import the rest. The economic theory that describes this is called comparative advantage. It was developed by English businessman and economist David Ricardo in 1817. For example, in the 17th–18th centuries, Caribbean colonies like Barbados and Jamaica mostly specialized in sugar production and imported a lot of their other goods. Keep this concept in mind as we proceed.

As countries developed and technology got more advanced, they naturally shifted focus from manufacturing goods to providing services. This shift happened because making things became more efficient with technology, requiring fewer workers. Also, as people earned more, they wanted to spend more on services. The natural progression of an economy is to evolve from labor-intensive economic activities to higher-value, more knowledge and skill-intensive ones.

Now, let’s introduce globalization.

According to Webster, globalization is the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets. With increasing globalization, wealthy countries chose to move their manufacturing to other countries because they had the advantage of lower labor costs and less regulation (e.g. air quality). This transition meant the wealthy nations could focus on more profitable industries like tech, finance, healthcare, and higher-value manufacturing where they now had a comparative advantage.

Global GDP adjusted for inflation - Ourworldindata.org

After WWII, the U.S. ushered in a new economic era by championing free trade and enforcing freedom of navigation on the world’s oceans. Increased globalization and new technology, combined with U.S. efforts, caused global GDP to shoot up exponentially. This meant more prosperity and less poverty in the US and around the world. While this was great for most people, there are always tradeoffs in life. Not everyone was prosperous. For example, manufacturing in cities like Detroit and steel towns across the U.S. were hollowed out. Some people who used to work these jobs had a hard time transitioning to other roles. Mix these real pain points with miseducation and politicians who want power and legacy, you end up where we are today: a large portion of the U.S. population blames globalization for a lot of their economic misfortunes.

Ok ok… Why won’t it work then?

It’s not that tariffs couldn’t work. Selective tariffs targeting specific industries could work wonders. The broad tariffs the Trump administration is trying to implement won’t work. Why? There are multiple reasons:

1. The U.S. economy has already transitioned to a higher-value, more profitable, Knowledge and skill-intensive economy. The U.S. has very low unemployment—4.2% as of March 2025. Unless the U.S. is willing to allow mass immigration, it can’t bring back a lot of the lower-level manufacturing that was moved overseas without trading off many of the industries it has now. That would just recreate the side effects of globalization, but in reverse. Hence why I made this meme that went viral (most people missed the point completely):

   

2. Having a strong US dollar means Americans have more purchasing power abroad but will get outcompeted when it comes to lower level manufacturing. US workers get paid in US dollars and Factories in the US pay US taxes. It’s hard to compete with foreign workers earning $2 an hour for the same work you do for $20.

3. Broad tariffs mean manufacturing inputs become more expensive. Let’s say the U.S. puts a broad 20% tariff on everything, and a US based company tries to manufacture smartphones domestically. To do so, it needs a wide range of components: microchips, rare earths, lithium for batteries, OLED displays, and certain sensors. If the manufacturer can’t find a high quantity of those materials domestically at a good price, they have to increase the price of their smartphones. Remember that economies have a limited supply of labor; you can’t produce everything. You have to choose. The inputs you don’t produce or don’t produce enough of make other things expensive.

4. Producers are more profitable when they can export their excess production to other countries. For example, the U.S. makes a lot of soybeans, so much that the domestic market can’t buy it all. U.S. farmers export their excess production to other countries. Their revenues from soybean exports totaled around $24.58 billion in 2024. When you impose high tariffs on other countries, they tend to return the favor with retaliatory tariffs. This makes it harder for producers to export their excess and leads to lower prices and smaller profits. Overproduction can cause layoffs and downsizing.

The only way these broad, high tariffs would work is if there are huge advancements in AI and automation. But then you’re hoping your bad idea gets bailed out by technology, and that won’t bring back jobs. That’s a bad way to do things.

I’m predicting the U.S. will reverse course at some point in the near future due to pressure from business leaders and regular citizens alike.

Long one today, thank you for reading.